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The U.S. Department of the Treasury announced this afternoon that it is now accepting applications for the renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Applications must be filed electronically. Find further information on Treasury's guidance regarding this program here.

Sen. Murkowski (R-AK), the ranking member of the Senate Energy and Natural Resources Committee, released a statement yesterday urging the Interior Department to complete its environmental analysis of the 5-year offshore leasing program (2007-2012) as quickly as possible. The D.C. Circuit ordered this analysis in April when it vacated and remanded the plan, and this week clarified that its order applied only to leases off Alaska.

Secretary of the Interior Ken Salazar expressed approval of the U.S. Court of Appeals for the District of Columbia Circuit's clarification of its April decision vacating the 2007-2012 Outer Continental Shelf oil and natural gas leasing program. Salazar commented, "President Obama has made clear that a comprehensive energy plan that reduces America’s dependence on foreign oil must include domestic production and the Court’s ruling allows us to move forward in a balanced way. With respect to the Arctic Ocean and Alaska, we will continue to work expeditiously to address the environmental issues identified by the Court in the existing 2007-2012 5-year plan.”

In a decision handed down yesterday, Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas has ruled in favor of defendant Maersk Contractors USA Inc. in patent litigation with Transocean, Inc., finding that dual-activity offshore drilling technology patented by Transocean is the result of years of progress in the industry and not, as the company claims, its own invention. The loss marks a departure from a string a victories, including jury awards and favorable settlements, that Transocean has amassed pursuing infringement claims over its drilling patents. 
 
Transocean claimed that since the mid-1990s, its technology has allowed oil rigs to drill wells faster and more efficiently by combining all the prior time-saving methods into one design. Maersk contested the claims arguing that Transocean's advances did not improve upon methods that had been patented by four separate inventors in the U.S. and U.K. between 1980 and the months before Transocean filed its first patent application. Transocean has stated that it plans to appeal the decision.
 
Until this ruling, Transocean had been victorious in its previous protection of the "dual-activity" patent. In August 2006, a jury found that GSF had willfully infringed the patents and awarded Transocean $3.6 million. Transocean filed a similar suit over the same patents against rival Noble Corp. in February 2007. The parties settled in July 2007 and signed a licensing agreement in which Noble consented to pay an undisclosed royalty to continue to use the technology. Also in July 2007, Pride International, Inc. agreed to pay Transocean $10 million to use one dual activity rig, plus $15 million for each subsequent rig and a 5% royalty on revenue generated in patented countries.
 
While Transocean has advised that Judge Hoyt's ruling will not have an impact on the current licensing agreements, it surely will affect Transocean's ability to continue licensing the technology to the Gulf Coast exploration and production industry.

The U.S. Court of Appeals for the District of Columbia yesterday issued an order which advised the Interior Department that the court's April decision -- which vacated Interior's 5-year leasing program (2007-2012) and remanded the matter back to Interior for reconsideration -- applies only to lease offerings in the Beaufort, Bering, and Chukchi Seas off the Alaska coast.  This clarification eases fears held by Interior and others, including Sen. Mary Landrieu (D-LA), that the April decision would derail the upcoming August 19 Gulf of Mexico lease sale, as well as cloud the continuing validity of some 1,800 previously awarded Gulf of Mexico leases.

In a press release issued yesterday, Senator Lisa Murkowski (R-AK) announced the introduction of the Domestic Energy Security Act (S. 1517), which would authorize revenue sharing for any coastal state that allows new oil and gas exploration. Specifically, the legislation would grant coastal states a 37.5% share in revenues generated from oil and natural gas production in federal waters off their shores. In announcing her support as a co-sponsor of the legislation, Senator Mary Landrieu (D-LA) stated, “As our nation weans itself off foreign oil and transitions to the next generation of energy, we need OCS production in U.S. waters to get us there. Coastal states will play a key role in building that ‘energy bridge’ if Congress can guarantee them their fair share of revenue and conservation royalties."
 
The bill also would permit leasing in the eastern Gulf of Mexico to within 45 miles of Florida's coast and in the Destin Dome area, which reaches to within 10 miles of the Florida coast near the panhandle.  
 
In response, Sen. Bill Nelson (D-Fla.) denounced the new bill, calling it an oil industry bailout. Nelson said, "it's Alaska and Louisiana's senators' plan to boost their own revenues in tough economic times. But even in the toughest of times, there are some things states shouldn't sell out, like Florida's economy and environment.''

Last Friday, July 24, the California State Assembly voted 43-30 against new offshore drilling in its state waters.  The drilling provision, which would have granted Plains Exploration & Production Co. the right to drill off of an existing platform in federal waters into state waters and would have brought approximately $100 million annually for 15 years in oil royalty payments to the state, narrowly passed the state Senate earlier in the day.  The bill lost traction in the lower house, where the pleas of environmental groups apparently swayed the vote.  If the bill had passed, it would have authorized the first drilling in the waters offshore California since 1969.

The Monitor (McAllen, Texas) reports that the Texas General Land Office has reached an agreement with Baryonyx Corp. that will allow the company to lease a parcel of land offshore Texas to build a wind farm. The wind farm will be located approximately 10 miles off the coast of South Padre Island and will provide electricity for up to 600,000 homes.

Monday's Boston Globe offers an analysis of the pros and cons associated with deepwater offshore wind projects. According to the piece, project developers hope to design and install wind turbines approximately 20 miles offshore so that the turbines will not be visible from shore, possibly avoiding the local opposition faced by the Cape Wind project.

In an important development for offshore wind across the pond, license extension requests were recently granted for operators of UK offshore wind farms. The extensions will lengthen leases to 50 years from 22-year or 40-year leases. The additional time will allow wind farm operators to invest in replacing aging turbines and update technology. This development comes on the heels of Scotland’s passage of a Renewable Action Plan to obtain 20% of total energy needs from renewable sources by 2020.  Read more in World Gas Intelligence. [Subscription required]

The San Francisco Chronicle reports that the state of California may allow increased exploration and production of oil and natural in its state waters as a means to raise revenue for the state and close its $26.3 billion budget gap. The proposal would allow Plains Exploration & Production Co. to drill horizontally from its existing production platforms situated on federal lands into state lands. State Assemblyman Pedro Nava (D) expressed opposition to the proposal in a press release.

Demonstrating the increasing attention that is being paid by certain East Coast states to offshore energy resources, the Advisory Subcommittee on Offshore Energy Exploration, a legislative research body whose members were appointed by the leadership in the North Carolina General Assembly, will hold a public hearing at the University of North Carolina Wilmington on July 28, 2009. The members of the subcommittee will consider the potential impacts on North Carolina of oil and gas exploration and production proposed for federal waters offshore North Carolina, as well as energy generated from wind, waves, ocean currents, the sun and hydrogen production. The Lumina News (Wrightsville Beach, NC) provides further details.

MMS announced yesterday that it will hold OCS oil and gas lease sale 210 on August 19, 2009, in New Orleans, LA. The 3,400 blocks available for mineral lease include approximately 18 million acres of OCS lands in the Western Gulf of Mexico Planning Area offshore Texas. Find further information in the Federal Register or the MMS announcement.

The DOE announced that $13.8 million -- $12.8 million of which is from American Recovery and Reinvestment Act ("stimulus") appropriations -- has been awarded to 28 wind projects.  These wind projects are focused on wind turbine research and transmission analysis. DOE also released its 2008 Wind Technologies Market Report, which found that the U.S leads the world in annual capacity growth and that soaring demand for wind power has spurred increased wind turbine manufacturing activity. Said Secretary Chu: "To help meet these [current economic] challenges, the Recovery Act invests significant dollars to put people to work to spur a revolution in clean energy technologies ... Wind energy will be a critical factor in achieving the President's goals for clean energy, while supporting new jobs."

Today, July 15, 2009, S. Elizabeth Birnbaum assumed her duties as Director of the MMS.  Birnbaum previously served as Staff Director for the Committee on House and Administration and the Department of the Interior's Associate Solicitor for Minerals Resources. From 2001-2007, she was Vice President for Government Affairs and General Counsel for American Rivers, where she directed advocacy programs for the nation’s leading river conservation organization. Birnbaum has been an officer and member of numerous boards and commissions, including the National Capital Section of the American Water Resources Association; Arlington County Environment and Energy Conservation Commission; and the Environment, Energy and Natural Resources Section of the District of Columbia Bar.

On Monday the Department of Justice filed a Petition for Writ of Certiorari with the Supreme Court in Department of the Interior v. Kerr-McGee Oil and Gas Corp., seeking to challenge a Fifth Circuit ruling earlier this year that held that the Deepwater Royalty Relief Act of 1995 did not authorize price thresholds in deepwater oil and gas leases issued between 1996 and 2000.  Respondents have until August 12 to reply. View the Supreme Court docket here.

The U.S. Department of the Treasury has issued much-anticipated guidance for Treasury's renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Find further information on Treasury's guidance here.

The New England Marine Renewable Energy Center, located at the University of Massachusetts - Dartmouth, has received nearly $1 million to fund its research on renewable energy resources off the coast of Massachusetts. Find additional details in the Boston Globe.

This past weekend the Washington Post examined several proposed offshore wind projects, including Bluewater Wind and Cape Wind, in the context of the current global economic climate. The piece notes that despite encouragement from Washington, D.C., policymakers, the projects face difficult financial and regulatory challenges.

On July 13, 2009, MARAD and the U.S Coast Guard published notice in the Federal Register of the availability of the Final Environmental Impact Statement  (FEIS) for the Port Dolphin LNG Deepwater Port license application. The project proposes a deepwater port in the St. Petersburg block of the Outer Continental Shelf. The port would consist of a permanently moored unloading buoy system designed to moor a specialized type of LNG vessel called Shuttle and Regasification Vessels, which have capacities of 145,000 and 217,000 cubic meters. The unloading buoys would connect to a pipeline onshore in Port Manatee, Florida, which would connect with the Gulfstream Natural Gas System and Tampa Electric Company. The project will require approval from FERC for the onshore pipelines, potential permits from the Army Corps of Engineers for the pipeline and structures, and permits from the EPA under the Clean Air Act and the Clean Water Act.
 
Public hearing will take place in Palmetto, Florida on July 28, 2009. Comments on the FEIS or the application are due by August 23, 2009.  As explained in the notice, the FEIS should be accessible soon  in Docket No. USCG-2006-28532 on www.regulations.gov.

On July 8, 2009, the Senate Commerce, Science, and Transportation Committee approved  the Maritime Administration Authorization Act of 2010, which among other things, would create a grant program for "America's Marine Highways" as an extension of the surface transportation system. The provision, authored by Sen. Frank Lautenberg (D-NJ), would encourage more freight to be carried by barges and ships by sea and by inland waterway in an effort to reduce roadway congestion. The bill would also establish a Port Infrastructure Development Program for local jurisdictions and port facilities to improve the capabilities of their port facilities. Senator Lautenberg's press release can be found here. Additional commentary can be found in the New Jersey Politicker blog.  

On July 1, the EPA released a pre-publication rule that would reduce emissions from diesel engines on oceangoing vessels by banning the production and sale of marine fuel oil above 1,000 ppm sulfur, as well as introducing new NOx standards for Category 3 marine diesel engines.  Once the proposal is published in the Federal Register (expected before July 24), there will be 30 days to comment.  

The National Marine Fisheries Service (NMFS) has issued an incidental harassment of marine mammals authorization to Neptune LNG, LLC for one year until June 30, 2010. The announcement is available in the Federal Register.

On June 30, 2009, the Massachusetts Executive Office of Energy and Environmental Affairs issued a comprehensive draft ocean management plan that is intended to "serve as the basis for the protection and sustainable use of our ocean and coastal waters." Massachusetts becomes the first state in the nation to release such a comprehensive plan, which is the result of more than a year of consultations, public meetings and scientific and policy analysis. The final plan will be issued by December 31, 2009, after a six-month public review and comment period. The draft plan is now available on the EOEEA website.

The MMS published a formal notice regarding the leases of five OCS blocks off the coasts of New Jersey and Delaware that were announced last week. The five OCS blocks -- awarded to four companies -- are being leased for the purpose of gathering data about offshore wind potential in those areas.  
 
MMS also released environmental assessments, which found the leases would have no significant effects on the human environment. Therefore, MMS prepared a Finding of No Significant Impact (FONSI) and concluded that no formal Environmental Impact Statement will be required for issuance of these leases.