Ocean Renewable Energy Coalition FAQ Re MMS-FERC Dispute

By Edwin Garcia,2014-03-30 22:11
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Ocean Renewable Energy Coalition FAQ Re: MMS-FERC Jurisdictional Dispute Over Authorization of Wave, Tidal and Current Projects on the Outer Continental

    Ocean Renewable Energy Coalition FAQ Re: MMS-FERC Jurisdictional Dispute Over Authorization of Wave, Tidal and Current Projects on the Outer Continental Shelf

    1. What’s the dispute between MMS and FERC regarding wave, tidal and

    current projects on the Outer Continental Shelf?

    Essentially, both agencies claim that they have the power to decide whether

    . to authorize a wave, tidal or current project on the OCS

     Before EPAct 2005, the Outer Continental Shelf Lands Act (OCSLA) gave MMS the power to issue leases on the Outer Continental Shelf (OCS) only for oil, gas and minerals extraction. In 2002, the Nantucket-based Cape Wind company proposed an offshore wind farm for the OCS. Cape Wind’s actions triggered arguments from opponents that the

    offshore wind project was unlawful because MMS was empowered to issue leases for oil and gas and not wind

     EPAct 2005 was intended to close this regulatory gap by giving MMS the power to issue leases for alternative energy development on the OCS, except for those projects already covered by statutes like the OTEC Act or the Deepwater Port Act and those proposed for marine sanctuaries. In addition, EPAct 2005 contains a saving clause, providing that nothing in the new law diminishes another agency's existing authority under other laws.

     That’s where FERC comes in. Under the Federal Power Act, FERC has authority to license projects that use water to generate electricity and which are located on navigable waters, federal lands or reservations or on commerce clause waters with a grid interconnection. In 2003, in the AquaEnergy decision, FERC decided that a wave energy

    buoy was a project within the meaning of the Federal Power Act, and was subject to FERC jurisdiction because of its location in navigable waters, which FERC originally defined as extending 12 miles out or to the limits of the territorial seas. Because FERC's AquaEnergy

    decision was on the books when EPAct 2005 passed, FERC argued that EPAct's savings clause preserved its jurisdiction.

    2. Does the FERC/MMS jurisdictional dispute affect offshore wind or OTEC?

     Not directly.

    Ocean Renewable Energy Coalition

    12909 Scarlet Oak Drive, Darnestown Maryland 20878

    (301) 869 3290

     FERC’s authority under Part I of the Federal Power Act only extends to projects that use the power of water to generate electricity. Using water as a secondary part of the power project, for example, as coolant at a steam plant, will not trigger FERC jurisdiction. Because offshore wind projects use wind to generate electricity and water (or waves) are at best ancillary, FERC does not have power to license offshore wind. However, the inability to resolve the FERC/MMS jurisdictional dispute has delayed MMS’ issuance of a Final Rule to govern issuance of leases for alternative energy on the OCS, which in turn, has stymied offshore wind developers from moving ahead with projects.

     OTEC projects are explicitly excluded from MMS jurisdiction because EPAct 2005

    explicitly states that MMS will not have authority over projects covered by the OTEC

    Act of 1980. Under the OTEC Act, NOAA has authority to license an OTEC plant.

3. Why can’t MMS and FERC co-exist on the OCS?

    Because MMS contends that FERC does not have authority to site wave, tidal

    or current projects on the OCS.

     FERC acknowledges that MMS must issue a land lease even if FERC were to license projects on the OCS. However, MMS contends that FERC’s jurisdiction is limited to three miles offshore and does not extend to the OCS. MMS bases its argument on analogous statutes such as the Rivers and Harbors Act, which adopt the traditional definition of navigable waters as extending up to three miles offshore. MMS believes that if Congress had intended to expand FERC’s authority over navigable waters beyond 3 miles, it would have so stated explicitly in the Federal Power Act. By contrast, FERC argues that the Federal Power Act does not contain any specific language limiting the definition of navigable waters.

     Because MMS does not agree that FERC has jurisdiction over wave, tidal and current projects on the OCS, it maintains that it cannot lawfully share its authority with FERC.

    4. Didn’t the agencies negotiate an MOU to share jurisdiction, and what did the

     MOU say?

     Yes, MMS and FERC did negotiate an MOU, but it was never adopted or publicly released.

     Based on public statements by MMS and FERC staff at various industry hearings as well as an article by now-acting FERC Chair Wellinghoff, we understand that MMS and FERC staff negotiated an acceptable Memorandum of Understanding (MOU) to share authority on the OCS. Apparently, the MOU provided that FERC would not issue preliminary permits on the OCS, which would minimize the possibility of claim jumping and enable MMS to retain its role of planning for OCS uses. In addition, the agencies would cooperate on environmental review.

    Ocean Renewable Energy Coalition

    12909 Scarlet Oak Drive, Darnestown Maryland 20878

    (301) 869 3290

    5. What happens if the jurisdictional dispute isn’t resolved?

     The entire offshore renewable industry will come to an impasse.

     Failure to resolve the MMS-FERC jurisdictional dispute will stymie offshore renewable development - both marine renewables and offshore wind in the United States.

    First, resolution of the dispute is necessary so that MMS can issue its final rules for leases for alternative energy development on the OCS. Without these rules, offshore wind and wave, tidal and current development cannot move forward on the OCS. Second, the lack of resolution has lead to gamesmanship. For example, one company filed with FERC multiple applications for preliminary permits for projects that consist of a small amount of wave and a large amount of wind energy. Whether coincidence or not, these proposals either abut or completely subsume sites selected for development by offshore wind developers in Rhode Island and New Jersey pursuant to the terms of successful requests for proposals with these states. And there is nothing to prevent a wind energy developer from requesting a lease from MMS for lands encompassed within a wave energy proposal submitted to FERC. Site access is a prerequisite to private investment and any regulatory uncertainty related to companies’ ability to acquire property rights necessary to site a project will drive away investors.

6. So should Congress just pick one agency FERC or MMS to eliminate these


     Unfortunately, the answer isn’t that simple.

     Many marine renewables developers have advocated for FERC jurisdiction on the OCS given FERC’s past work in crafting a licensing process for marine renewables. However, giving licensing authority to FERC would not remove MMS from the equation. FERC is not a planning agency and FERC licenses do not confer property interests. Consequently, developers would still need to obtain a lease from MMS. Unless the MMS lease process is coordinated with the FERC process, developers might wind up subject to duplicative regulation. Moreover, because FERC licenses do not confer property rights, an applicant for a wave energy license could find itself “bumped” from a site if MMS decided to issue a lease for lands necessary for the project to a competing developer.

     On the other hand, giving jurisdiction to MMS over wave, tidal and current projects will not always be feasible either. Right now, the “sweet spot” for most wave energy projects lies right at the 3 mile mark, which means that many early stage wave projects will straddle OCS and state lands. It is simply not sensible for FERC to authorize half of a unit of development and MMS to authorize the other. In addition, one advantage of the FERC process is that it is a unified process that encompasses both the project transmission line and the generation units. A unified process may offer the most expeditious siting solution to wave, tidal and current developers particularly during this nascent phase.

    Ocean Renewable Energy Coalition

    12909 Scarlet Oak Drive, Darnestown Maryland 20878

    (301) 869 3290

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