Yesterday President Barack Obama signed an executive order adopting many of the recommendations put forward by the Interagency Ocean Policy Task Force.  The order sets forth policy guidelines for managing the ocean, U.S. coasts, and the Great Lakes, and mandates that executive agencies follow these new guidelines.  The order also creates a National Ocean Council to “ensure that executive departments’, agencies’, or offices’ decisions and actions affecting the ocean, our coasts, and the Great Lakes will be guided by the stewardship principles” described by the Task Force.

Yesterday President Obama announced that Michael R. Bromwich has been selected to lead efforts to reorganize and reform MMS. Bromwich is a former Assistant U.S. Attorney and previously served as Inspector General of the U.S. Department of Justice.

Today President Obama announced the remaining members of the offshore drilling commission to be co-chaired by former Sen. Bob Graham (D-FL) and William Reilly.

The Obama Administration announced yesterday that the Minerals Management Service will be reorganized into two agencies. According to Secretary of the Interior Ken Salazar, one entity will be responsible for approving oil and gas leases and managing the federal royalties program, and a second body will have responsibility for safety in exploration and production operations. The Washington Post provides further information.

Challenging politicians in Washington and the American people to "move beyond the tired debates of the left and right, the business leaders and the environmentalists," President Obama announced this morning that his administration is proposing to make more than 167 million acres of OCS lands off the Atlantic and Gulf coasts and in the Arctic available for oil and natural gas leases. This proposal begins the process for oil and natural gas E&P leases on the East Coast, from Delaware to the central coast of Florida, a feat which Republicans were unable to accomplish during the 8 years of the Bush Administration. Offshore areas from New Jersey to Maine would remain off-limits. According to the New York Times, the Administration hopes the offshore leasing plan will reduce dependence on oil imports, generate revenue from the sale and production of offshore leases, and boost support in Congress for comprehensive energy and climate legislation.  As the President noted in his remarks today, "This announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies on homegrown fuels and clean energy. ... Failure to recognize this reality would be a mistake."
 
In response to this morning's announcement, Sen. Ben Cardin (D-MD), noting the environmental risks associated with offshore E&P activities, told CNN that "there are areas that are acceptable for drilling, but I think this is too high of a risk for Maryland." Senator Cardin was one of the senators who signed a letter to Senate colleagues expressing concern over the effects of increased offshore energy activities on coastal tourism and fishing economies.
 
Reacting to the President's announcement, Randall Luthi, president of the National Ocean Industries Association (NOIA) called the Obama Administration's plan, "a good start to secure reliable and increased access to areas of the OCS where vital energy resources may lie."  Luthi went on to note that NOIA is "delighted that the Administration agrees with the State leadership in Virginia that the lease sale off that coast should go forward under the current plan."

President Obama proposed an $8.9 billion FY 2011 budget for the Department of Commerce yesterday.  One of the goals of the budget proposal is to fund the President's National Ocean Policy, which includes plans for comprehensive coastal and marine spatial planning and provides for coordination between federal, state, tribal, local and regional entities for efficient management of the oceans.  For more information on the Commerce Department's proposed budget, click here.

Today the White House Council on Environmental Quality released an Interim Framework for Effective Coastal and Marine Spatial Planning ("Framework").  The Framework was developed by the Interagency Ocean Policy Task Force, which is composed of twenty-four senior officials from administrative agencies, departments, and offices, and is led by White House Council on Environmental Quality Chair Nancy Sutley.  It was developed pursuant to one of the nine priority objectives proposed earlier this year in the Task Force's Interim Report.  While the Framework does not purport to establish actual marine planning zones, it does establish a process for federal agencies to work with state and local governments to develop and implement coastal and marine spatial plans over the next five years.  
 
In a press release announcing the Framework, Sutley stated, "The uses of our oceans, coasts and Great Lakes have expanded exponentially over time...Without an improved, more thoughtful approach, we risk an increase in user conflicts and the potential loss of critical economic, ecosystem, social, and cultural benefits for present and future generations."

On Sept. 17 the White House released the Interagency Ocean Policy Task Force Interim Report for comments.  The report is in direct response to President Obama’s request for recommendations that will augment national policy on the management of oceans, coasts and the Great Lakes.  The Report proposes a National Policy for the stewardship of oceans and outlines governance modifications that would place the White House Council on Environmental Quality and the Office of Science and Technology Policy in charge of an interagency National Ocean Council charged with implementing the National Ocean Policy.  In addition, the Report outlines nine National Priority Objectives, including the implementation of comprehensive coastal and marine spatial planning and management and better coordination of federal, state, tribal, local,  and regional management of the oceans.

Along with accepting comments, the Interagency Ocean Policy Task Force has two upcoming public hearings on the issue.

The White House-created Interagency Ocean Policy Task Force has begun work on its new ocean policy recommendation to President Obama that would unify the 20 federal agencies and over 140 distinct laws that address aspects of ocean policy. After a series of listening tours around the country that began last week, the task force is slated to develop recommendations that will focus on protecting the oceans and the Great Lakes, as well as sustaining economic activity that depends on them. The group will then have three months to lay the groundwork for a new marine planning system, which could create a new system of ocean zoning to allocate resources across varying uses from recreation to shipping to renewable energy. NOAA Administrator Jane Lubchenco told Greenwire (carried via the New York Times [free registration required]) that the task force is unlikely to have the specifics of a marine spatial plan worked out by the end of this year, but she expects that the group will have a more detailed road map developed by that time.

President Obama plans to nominate Cynthia Quarterman to lead the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). Quarterman, a member of Obama's DOE Transition Team, previously served as MMS Director during the Clinton Administration. She is currently a partner at a law firm in Washington and has also worked as an engineer for IBM. Quarterman holds a law degree from Columbia University and a degree in Industrial Engineering from Northwestern University.  

Last Friday, President Barack Obama issued a memorandum ordering the formation of an Interagency Ocean Policy Task Force, headed by the Chair of the Council on Environmental Quality. The task force will develop recommendations for a national policy on oceans, coasts, and the Great Lakes, as well as develop a "recommended framework for effective coastal and marine spatial planning" within 180 days of the memo.

Today, the Joint Ocean Commission Initiative released a report calling for the creation of a White House-level ocean policy coordinator and Senate ratification of the U.N. Law of the Sea Treaty.  The report also recommends amending the Clean Water Act, creating an ocean investment fund with offshore revenue, and allocating carbon emissions allowances revenue for research.

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).

House Natural Resources Committee Chairman Nick Rahall (D-WV) praised President Obama's fiscal year 2010 budget in a news release, claiming that under it "taxpayers [will] receive a fair return for the extraction of oil and natural gas resources on public lands." The budget's proposals implement ideas that Rahall has advocated for and introduced in the past: "Last Congress, I introduced legislation to reform the royalty collection program, encourage the diligent development of federal oil and gas leases, and require energy companies to pay their fair share for the use of public resources.  I am heartened that the President's budget includes all of these initiatives, and also correctly identifies our public lands as an immense potential resource for the development and deployment of domestic alternative energy," Rahall said

The Office of Management and Budget ("OMB") released the President's budget today, outlining the Administration's spending priorities for fiscal year 2010.  The overall budget allocation for the Department of the Interior, which includes the Minerals Management Service, is $12 billion.  The fact sheet for Interior states the budget will help "promote energy security with a focus on clean renewable sources and strategies to address climate change."  On the revenue side, the budget "includes provisions to encourage responsible development of oil and gas resources, and closes loopholes that have given oil companies excessive royalty relief."  Specifically, it calls for "using a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes" that have provided such relief.  It notes that the new tax would not begin until 2011, "after the economy has had time to recover."   The budget outline also makes reference to charging user fees for the processing of oil and gas drilling permits on federal lands as well as adjusting royalty rates to secure a greater return on production.  This budget provides an outline for Congress to utilize as it developments a federal budget for fiscal year 2010.  Both the House and the Senate will start to work on the individual appropriations bills later in the Spring.

On February 17, 2009, President Obama signed into law the “American Recovery and Reinvestment Act” (“ARRA”), a $787.2 billion spending and tax cut stimulus package.  The following is a summary of the major provisions in the ARRA that may impact offshore wind energy projects.

Production Tax Credit Extension. Internal Revenue Code (“IRC”) § 45 allows a production tax credit (“PTC”) for production of electricity at a “qualified facility” using “qualified energy resources.”  PTCs are generally available during the 10-year period beginning on the date that a qualified facility is placed in service. The amount of the available PTC is the product of the amount of electricity produced and an inflation-adjusted amount published annually by the IRS.

A qualified facility must be placed in service before specified dates. The ARRA extended by 3 years, from January 1, 2010 to January 1, 2013, the date before which a wind facility must be placed in service to be treated as a qualified facility. 

Election to Claim ITC in Lieu of PTC.  Under IRC § 48, an investment tax credit (“ITC”) is available with respect to “energy property.”  Prior to the ARRA, the term “energy property” did not include wind facilities.  The ARRA expands the ITC to allow taxpayers to make an election to claim with respect to wind facilities (in lieu of a PTC), an ITC equal to 30% of the taxpayer’s basis in the wind facility.  The ITC is claimed during construction of the wind facility and/or in the year that the wind facility is placed in service (as compared to the PTC which provides a credit over the 10-year period after a wind facility is placed in service) 

Repeal of ITC Subsidized Energy Financing Reduction. The amount of the available ITC is 30% of a taxpayer’s basis in a wind facility.  The ARRA amended the ITC so that no reduction in the amount of the tax credit is required for energy property constructed using subsidized energy financing or private activity bonds, the interest on which is tax-exempt. Subsidized energy financing includes financing under a federal, state, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.

Treasury Grant In Lieu of PTC or ITC. In lieu of claiming PTCs or ITCs with respect to wind facilities, the ARRA provides that a grant may be obtained from the Department of Treasury. To qualify for the Treasury grant, either (i) the property must be placed in service during 2009 or 2010 or (ii) construction must begin in 2009 or 2010 and must be completed before January 1, 2013. The amount of the grant is the 30% of a taxpayer’s basis in a wind facility.

Increased Funding for Clean Renewable Energy Bonds. Under current law, the amount of “New Clean Renewable Energy Bonds” available under IRC § 54C is limited to $800 million. The ARRA increases the bond limitation by $1.6 billion.

Innovative Technology Loan Guarantee Program. The ARRA appropriates $6 billion to pay the costs of guarantees made under § 1705 of the Energy Policy Act of 2005, as amended. Eligible projects under § 1705 must commence construction no later than September 30, 2011 and include wind facilities.  Unlike previous loan guarantees made under the Energy Policy Act of 2005, those made under § 1705 do not require the facility to employ new or significantly improved technologies.

For additional information on impacts of the ARRA on other forms of renewable energy, please click here.

In a press release issued today, House Minority Leader John Boehner (R-OH) announced that he and several of his Republican colleagues wrote to President Obama and the Department of the Interior to urge them not to block energy exploration on the Outer Continental Shelf. The Members stated OCS energy exploration is critical to lowering energy costs and to job creation.

The Bush Interior Department, during its last days in office, has proposed a plan to broaden offshore oil and gas leasing, including regions off both the east and west coasts and the Gulf of Mexico.  MMS has jurisdiction over federal oil and gas leases, including the Outer Continental Shelf, over which a decades-old moratorium on drilling recently expired.  President-elect Obama has signaled that he supports new offshore drilling, but only as part of a "comprehensive package" on energy.  Greenwire provides further coverage.

The long-stalled wind energy project proposed for offshore Massachusetts received a positive Final Environmental Impact Statement (FEIS) today from the Interior Department’s Minerals Management Service (“MMS”), clearing the way for MMS to issue a lease to the project developer, Cape Wind Associates. While this positive FEIS sets the basis for final approval, the Obama Administration ultimately will determine the future of Cape Wind -- an interesting dilemma for President Obama given his support for renewable energy but the strong opposition to Cape Wind of Senator Ted Kennedy (D-MA), a critical supporter of candidate Obama during the Democratic primary. If approved, this will be the first offshore lease for a wind energy project authorized by MMS.