Yesterday the U.S. Department of Energy announced the creation of the Southeast National Marine Renewable Energy Center at Florida Atlantic University in Boca Raton, FL. DOE's press release notes that the center will be "ideally located to oversee development of equipment that can generate sustainable, cost-competitive electricity from ocean energy resources in the Florida Straits and the Gulf Stream."

The Department of Interior and the Department of Energy announced today a new Memorandum of Understanding (MOU) which seeks to prioritize and facilitate environmentally responsible deployment of commercial-scale offshore wind and marine hydrokinetic energy technologies on the Outer Continental Shelf.  Under the MOU, the two agencies will facilitate such development by pursuing priority leasing and efficient regulatory processes for sites with high commercial-scale offshore wind and water power development potential, as well as exchange information and collaborate on research projects.  "We have a major opportunity to tap the energy in waves and offshore wind," said Energy Secretary Steven Chu.  "Increasing cooperation between our agencies will help make clean, renewable energy a reality."

FERC announced today that it signed a Memorandum of Understanding (MOU) with California for the coordination of procedures and schedules for the review of hydrokinetic projects off the coast of California. FERC has previously signed similar MOUs with Washington, Maine, and Oregon. FERC Chairman Jon Wellinghoff stated that this agreement with California “shows FERC’s continuing commitment to work with the states to ensure American consumers can enjoy the environmental and financial benefits of clean, renewable hydrokinetic energy.”

DOE announced it will host a webinar on Monday, May 17 from 3-5 p.m. EST on a recently announced $38.6 million funding opportunity for the advancement of marine and hydrokinetic energy technologies.  For more information, click here.

MMS announced that it has recently funded four research studies to identify technological and operational safety issues related to the future development of offshore renewable energy on the OCS.  The studies focus on inspection methodologies and design characteristics of offshore wind turbines, installation and removal costs of ocean energy devices, and potential seafloor effects associated with the installation of renewable energy devices.  "We are continuously evaluating existing regulations and standards to adapt to these new technologies," said MMS Director Liz Birnbaum.  "We are contributing to both safety and efficiency through studies, risk assessments, and inspections."

The Department of Energy (DOE) announced yesterday that it intends to issue a Funding Opportunity Announcement (FOA) to facilitate the development of marine and hydrokinetic technology.  The "Marine and Hydrokinetic Technology Readiness Advancement Initiative" will competitively award funds to develop technologies that generate renewable electricity from waves, currents, tides, rivers, and the ocean's thermal energy.  DOE anticipates the FOA will be posted no later than March 31, 2010.

The Department of Energy (DOE) published notice yesterday that Reedsport OPT Wave Park, LLC has filed a hydroelectric application for the Reesdsport OPT Wave Park Project.  The application proposes construction of ten wave-powered generating units to be anchored about 2.5 miles off the coast of Douglas County, Oregon, spanning about a quarter of a square mile.  The buoys will be linked to a single Underwater Substation Pod, which will be connected to the Douglas Electric Cooperative transmission line.  The application is available for public comment, and DOE is preparing to commence the next steps of review.

The Department of Energy recently released its Report to Congress on Potential Environmental Effects of Marine and Hydrokinetic Energy Technologies.  The Energy Independences and Security Act of 2007 required DOE to prepare the Report in consultation with the National Oceanic and Atmospheric Administration.  The Report focuses on the potential effects of marine and hydrokinetic technologies on various aspects of the nation's aquatic environments and finds no conclusive evidence that marine and hydrokinetic technologies will cause significant environmental effects and highlights areas where further information and research is needed.

A DOE source told Energy Washington (subscription required) that the agency plans to sign a memorandum of understanding (MOU) with the MMS in the next two months to begin developing a streamlined permitting process for hydrokinetic power projects, including those on the OCS.  DOE reports that the MOU will broadly cover offshore renewable energy and outline a framework for collaborating on environmental assessments and streamlining the permitting process.  In addition, DOE plans to organize a series of meetings with the FERC, NOAA, the Department of Defense, and other federal agencies.  Reports of the DOE/MMS MOU follow on the heels of the House Committee on Science and Technology hearing on hydrokinetic energy earlier this month.

The House Committee on Science and Technology, Energy and Environment Subcommittee held a hearing Nov. 3 to discuss the role of the federal government and industry in the development of hydrokinetic energy generation.  Chairman Brian Baird (D-WA) noted that studies indicate approximately 10% of U.S. electricity demand could be met by hydrokinetic energy sources.  Currently, DOE reports that there is only one commercial hydrokinetic project operating in the U.S. (in the Mississippi River).  Congress first authorized funding for significant hydrokinetic technology research in the Energy Independence and Security Act of 2007, but DOE’s hydrokinetic R&D portfolio remains modest.  This hearing indicates that interest in these projects is growing.  Additionally, key agencies such as DOE, FERC, and DOI are considering forming a working group to speed up the regulatory process for permitting in the near future.

Yesterday, DOE Secretary Chu announced the agency will award up to $14.6 million to facilitate the develeopment of advanced water power technologies.  Twenty-two projects were selected to share in the award.  The winning projects include new hydropower tranmission,  new marine and hydrokinetic energy conversion devices at open water project sites, and studies of life-cycle costs for wave, current, and ocean thermal energy conversion technologies.

The DOE announced last week the selection of six projects for federal funding, each related to research regarding water power technologies, including both offshore marine and hydrokinetic energy.  The recipients for marine and hydrokinetic energy project funding are the National Renewable Energy Laboratory (Golden, CO), the Sandia National Laboratories (Albuquerque, NM) and the Pacific Northwest National Laboratory (Sequim, WA), each of which will be partnering with universities, other laboratories, and in some cases private industry.

Today FERC and the state of Maine announced that they have signed a Memorandum of Understanding to coordinate review processes and schedules for hydrokinetic energy projects proposed for offshore Maine.  This agreement is the first of its kind on the U.S. East Coast and is similar to previous agreements between FERC and the states of Oregon and Washington.

Today's Federal Register carries an announcement that Ocean Renewable Power Company, LLC has filed a Notice of Intent to file an application for an original license for a hydrokinetic pilot project proposed for state waters offshore Eastport, Maine.  Phase one of the project will include the installation of one 1-megawatt hydrokinetic device located in Cobscook Bay.  Phase two of the project includes installing four additional 1-megawatt hydrokinetic devices in Western Passage.  The Notice of Intent and additional pre-filing materials were filed July 24, 2009, and comments on the pre-filing materials are due by September 8, 2009.

Today DOE unveiled a new online database of hydrodynamic test facilities in the US to allow researchers to more easily locate test-phase hydrodynamic and hydrokinetic energy projects.  You can access the database here.

Today, FERC Chairman Jon Wellinghoff testified before the Senate Committee on Environment and Public Works (EPW) to address climate change legislation as it pertains to the energy sector.  Chairman Wellinghoff used the opportunity to express FERC's support for the development of hydrokinetic energy technologies.  As evidence, the Chairman referenced FERC's policy of allowing some hydrokinetic technologies to be tested without a license and others to receive expedited licenses under a "pilot license" process.  In addition, the Chairman pointed to FERC's Memorandum of Understanding with MMS clarifying jurisdiction over hydrokinetic projects on the OCS, as well as independent agreements on project development with Washington and Oregon states, as measures FERC has adopted to advance hydrokinetic projects.

Today, FERC and MMS issued joint Guidance to further clarify their respective roles in the application and development of hydrokinetic energy projects on the OCS. MMS has jurisdiction to issue leases to these projects and FERC has jurisdiction to issue licenses for these same projects. This Guidance is part of an ongoing effort to clarify each agency's authority and simplify the process for applicants and project developers. This process began in April when DOI and FERC issued a Memorandum of Understanding delineating each agency's responsibilities.

The Guidance follows a "frequently asked questions" (FAQs) format designed to facilitate the process of developing hydrokinetic projects on the OCS. The FAQs are divided into categories, including: general requirements and definitions; provisions for obtaining a lease and license; municipalities and competition; lease and license terms; financial assurance requirements; fee structures; hybrid project considerations; straddle projects; and contact information. Each FAQ provides step-by-step instructions explaining which agency's regulations should be followed throughout the project development process. 

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.

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.

On June 15, GreenWave Energy Solutions, LLC ("GreenWave") filed its proposed schedule of activities relating to its development of the San Luis Obispo Wave Park, a 100MW wave park off the California coast. FERC granted GreenWave a preliminary permit for the project in May, amending the boundaries of the project to bring the entire project within state waters, and thus allowing FERC to issue the preliminary permit under its recent MOU with the Minerals Management Service. GreenWave's proposed regulatory schedule includes: (i) the filing of its First Six Month Report on Oct. 31, 2009; (ii) the filing of a Notice of Intent and Traditional or Alternative Licensing Process Request on April 30, 2010; and (iii) the filing of its License Application on April 30, 2012. 

Chairman Henry Waxman (D-CA) of the U.S. House Energy and Commerce Committee released yesterday an updated version of H.R. 2454, the House bill designed to promote green energy and address global climate change. The document, called a "Chairman's mark" in Capitol Hill parlance, would require that "ecosystem-based management" of ocean resources serve as the foundation for all marine resource planning, as opposed to resource-based management. The bill also mandates a study of regional marine spatial planning by DOI, FERC, and NOAA that would identify a mechanism for formally installing a marine spatial planning regime and requires the U.S. Council on Environmental Quality to determine whether the approach outlined in the study ought to be followed in developing policies for renewable energy on the OCS. An official with the American Wind Energy Association told E&E [subscription required] that her organization is not opposed to marine spatial planning, but that she is concerned that offshore renewable energy projects currently under development could be delayed as the marine spatial planning policy is developed and implemented.

On Monday, Vice President Joe Biden, Secretary of the Interior Ken Salazar, and Sen. Tom Carper (D-DE) spoke on offshore renewable energy projects at the University of Delaware. The DOI press release quotes Vice President Biden touting the recently released framework for alternative energy development on the OCS, saying "[w]ith this rule, the Interior Department is unlocking our vast offshore renewable resources." Secretary Salazar echoed the vice president's comments, saying that the framework "will enhance our energy security, create the foundation for a new offshore energy sector and share much-needed revenues from this development with coastal states."

A longstanding skirmish regarding jurisdiction over renewable energy development in the Outer Continental Shelf (OCS) may have been laid to rest.  Yesterday, the Federal Energy Regulatory Commission (FERC) and the Department of the Interior signed a Memorandum of Understanding (MOU) further clarifying each agency's respective jurisdictional authority over offshore renewable energy projects.  The MOU applies to wind, solar, and hydrokinetic energy projects, including wave, tidal, and ocean current initiatives.  The MOU, which is intended to facilitate the development of alternative energy on the OCS, clearly divides the agencies' authorities.
 
First, the agencies recognize that Interior's Minerals Management Service (MMS) has "exclusive jurisdiction" over the production, transportation, and transmission of energy from non-hydrokinetic renewable energy projects on the OCS, including wind power projects.  The agencies do not recognize any role for FERC in the MOU for non-hydrokinetic projects, effectively closing FERC out of regulation in this area of renewable energy development, including, apparently, the transmission of electricity from such projects. 
 
The agencies also agree in the MOU that FERC has exclusive jurisdiction to issue licenses for the construction and operation of hydrokinetic projects on the OCS, pursuant to the Federal Power Act, as well as exemptions for those projects (although the applicability of the referenced exemptions is questionable).  In a significant reversal, however, FERC will not issue preliminary permits for hydrokinetic projects located on the OCS.  Previously, FERC has stated that it would apply its process for hydroelectric licenses to hydrokinetic projects on the OCS, including the preliminary permit process, which generally allows potential developers to secure sites for projects on an initial basis without a comprehensive NEPA review.  This change necessarily will impact several project developers who already have filed applications for preliminary permits with FERC.  The agencies thus far have given no indication of how they will treat those existing preliminary applications that were filed in reliance on FERC's existing regulations and policies. 

MMS will retain a significant role in the consideration of hydrokinetic projects.  Specifically, consistent with MMS' historical authority, the MOU states that MMS has exclusive jurisdiction to issue leases, easements, and rights-of-way regarding OCS lands for hydrokinetic projects.  In addition, MMS has the authority to attach terms and conditions to these contracts, which FERC must include in any license or exemption it issues.  Moreover, FERC cannot issue a license for a hydrokinetic project unless the applicant already has obtained the appropriate lease, easement or right-of-way from MMS.  This places significant power in the hands of MMS and could negatively impact hydrokinetic project proponents who have filed with FERC for a site for which there is also a competing wind power project application pending at MMS.  
 
To this point, FERC and Interior agree in the MOU to work together to develop policies and regulations regarding OCS hydrokinetic projects including processes to address hybrid projects and projects that straddle the boundaries between state and the OCS.  This is a critically important piece that has yet to be fleshed out, as many renewable power developers believe that hybrid projects incorporating both hydrokinetic and wind power represent the most economically viable projects. 

Although the MOU adds important detail to the agencies' respective jurisdictions, significant gaps remain.  It is unclear whether this Solomon-like division of authority actually will result in a more streamlined, efficient consideration of offshore renewable energy projects.  Finally, it also remains to be seen whether members of Congress who have strongly advocated for the development of offshore renewable energy will agree with this new framework. 

Click here to read the MOU.  The agencies' joint press release is here.

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.

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.

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.

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.

The U.S. Navy is in the early stages of developing a tidal energy project to produce electricity for its base at Indian Island, Washington. Pending funding for the $2 million project, the plan is to start a one-year pilot program next fall with six submerged turbines. If successful, tidal energy may be used to assist the Defense Department in meeting the National Defense Act of 2007 mandate to obtain 25% of its energy from renewable sources by 2025. The Associated Press (via The Oregonian) provides more details.

On October 16, the Federal Energy Regulatory Commission (FERC) announced its position that it has jurisdiction over the licensing of hydroelectric projects, including wave, tidal and other forms of ocean energy, located on the Outer Continental Shelf (OCS). FERC’s jurisdictional claim directly conflicts with the position taken by the U.S. Department of the Interior, Minerals Management Service (MMS), which currently is developing regulations for its Alternative Energy and Alternate Use (AEAU) program. The AEAU program involves the leasing of OCS lands for the development of hydroelectric, wind, solar and other alternative energy projects. FERC’s announcement does not assert jurisdiction over OCS wind or solar projects.

MMS’s Claim to OCS Jurisdiction

MMS derives its authority over hydroelectric projects on the OCS from Section 388 of the Energy Policy Act of 2005 (EPAct), which directs the Secretary of the Interior to grant leases, easements or rights-of-way for activities on the OCS that are related to production, transportation or transmission of energy from sources other than oil and gas. MMS asserts that its authority includes OCS hydroelectric licensing activities, as set forth in its proposed rule for the AEAU program. Specifically, MMS states that FERC’s jurisdiction is limited to issuing licenses and permits for projects located within state waters, which are generally limited to three miles offshore. MMS currently is reviewing comments received on its proposed rule and has stated that it expects to issue a final rule by the end of 2008.

FERC’s Claim to OCS Jurisdiction

FERC asserts that its jurisdiction derives from the Federal Power Act (FPA). Under the FPA, FERC claims that it has jurisdiction to license hydroelectric projects located on “navigable waters” and “streams or other bodies of water over which Congress has jurisdiction.” FERC concludes that these waters include the OCS. In addition, FERC contends that the FPA grants it jurisdiction over hydroelectric projects located on “reservations,” which are any lands owned by the United States, including OCS lands.

FERC further contends that Section 388 of EPAct did not alter its existing authority to permit hydroelectric projects in federal waters, but merely established MMS’ authority, as a federal land management agency, to issue leases, easements and rights-of-way necessary for such projects.

Continued Dispute

FERC addressed the jurisdictional dispute with MMS in the context of a rehearing order on two preliminary permits issued to Pacific Gas & Electric Co. to study the feasibility of developing wave energy projects on the OCS offshore California. FERC also raised the issue in comments it filed to MMS’s AEAU rulemaking, requesting that MMS remove hydroelectric facilities from its proposed program.

Although FERC Chairman Joseph T. Kelliher stated “I am confident that today’s decision puts to rest any questions about FERC’s jurisdiction over hydroelectric projects on the OCS,” this jurisdictional question likely will remain unanswered at least until MMS issues its final AEAU regulations. If MMS concedes jurisdiction to FERC in its Final Rule—an unlikely scenario—project developers will have clarification as to the regulatory process required for project authorization. If, on the other hand, MMS continues to assert jurisdiction over hydroelectric power projects on the OCS—the more likely scenario—the jurisdictional uncertainty may continue, leading to regulatory delay for project developers.

FERC’s order can be found on the FERC website’s eLibrary system in Docket Nos. P-12781 and P-12779.

Sutherland encourages all of its clients with interests in this matter to assess the possible impact on their commercial interests from the potential delay and this interagency jurisdictional conflict, and consider whether any action in response is appropriate.