Senator questions FERC involvement on Outer Continental Shelf

The chairman of the Senate Energy Committee is questioning the need for the Federal Energy Regulatory Commission to regulate energy projects on the Outer Continental Shelf, normally the domain of the Minerals Management Service.

�It is unclear to me whether both agencies should play a role with respect to authorizing these projects on the OCS,� Chairman Jeff Bingaman, D-N.M., said at an oversight hearing June 7 on Section 388 of the Energy Policy Act of 2005.

Section 388 authorizes the Interior secretary to issue leases, easements, and rights-of-way for alternative energy projects and alternate uses of the Outer Continental Shelf. (HNN 5/1/07) The Minerals Management Service, an Interior Department agency, is developing regulations and a programmatic environmental impact statement for an Alternative Energy and Alternate Use Program on the OCS.

At the same time, FERC is asserting jurisdiction under the hydropower provisions of the Federal Power Act for licensing ocean energy projects on the OCS, and is working on new regulations for ocean projects. As previously reported, MMS and FERC have agreed to work together on a memorandum of understanding on jurisdictional issues involving projects that would be developed on the OCS.

�One goal in enacting Section 388 was to simplify the authorization process for alternative energy projects,� Bingaman said. �FERC’s hydroelectric licensing process has a history of being complex, and I am not certain that applying the hydroelectric licensing process fits in this context.�

Interior Assistant Secretary C. Stephen Allred testified the MMS proposed rule could be issued in August or September, and a final rule in early 2008.

�Currently, the MMS is discussing with the Federal Energy Regulatory Commission a memorandum of understanding to coordinate federal efforts in reviewing and authorizing these exciting new proposals,� Allred testified. �The department’s desire … is to assure that FERC’s interest and authorities with regard to the transmission of electrical energy issues are considered as part of the regulatory program for which we believe MMS has the lead responsibility on the OCS.�

FERC director defends agency’s ocean energy role

Director J. Mark Robinson of FERC’s Office of Energy Projects testified the commission’s procedures are well established and well suited to address the expansion of conventional hydropower with �new technologies.�

He defined new technologies as mechanisms that produce hydropower from ocean currents, tide, and wave actions, without use of a dam. He said FERC is prepared to learn from experience, and to make regulatory adjustments to help realize the resource’s potential.

FERC expects most projects employing new technologies will be located in state waters, not on the OCS. (HNN 4/26/07) Of 21 preliminary permit applications for ocean projects pending at FERC on May 31, only three propose boundaries straddling the state-OCS line, and only one would be located entirely on the OCS, Robinson said. He added FERC would work closely with MMS for those projects located wholly or partially on the OCS.

FERC has issued 38 preliminary permits for the study of new technology projects as of May 31, including eight permits issued for ocean current energy projects for the OCS. None of the four permitted wave energy projects and 26 permitted projects proposing tidal energy is located on the OCS.

Jurisdictional dispute carries risk for ocean energy developers

An executive of wave energy developer Finavera Renewables said the jurisdictional dispute must be resolved.

Finavera Chief Executive Officer Jason Bak said uncertainty creates substantial risk for the ocean wave energy industry. The status quo, particularly the assertion of project regulatory authority by MMS, is producing results not in the public interest or consistent with congressional intent, Bak testified.

�In our view, the proper interpretation of existing law, and the proper resolution of the current disagreement, would place FERC squarely in the lead for the purpose of licensing our projects wherever located,� Bak said. “And MMS would have clear authority to convey leases or other proprietary rights on the OCS.�

Bak said FERC should be the principal regulator, and MMS should be the federal landlord.

�As we see it, the agencies both play very substantial, complementary roles with regard to use of the OCS,� he said. �Neither agency’s mission need be subordinated to that of the other.�

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