ENERGY POLICY:

Interior-FERC feud over offshore renewables winding down -- Salazar

A longstanding conflict between the Interior Department and the Federal Energy Regulatory Commission over offshore renewable energy development could be put to rest as soon as this week, Interior Secretary Ken Salazar said today.

Interior and FERC have been at odds for years over regulation of fledgling efforts to develop energy from offshore waves and currents. But a memorandum of understanding between the two may be imminent, Salazar told reporters.

"We will not let any of the jurisdictional turf battles of the past get in the way of our moving forward with a renewable energy agenda," Salazar said, adding that he recently met with FERC's chairman and that staff are trying to complete the document.

Attempts to reach a formal memorandum of understanding failed during the Bush administration as the agencies sought to reconcile FERC's licensing authority for hydropower with a 2005 energy law that handed jurisdiction over projects on the federal outer continental shelf to Interior's Minerals Management Service.

Salazar, who spoke by phone from Colorado, said he plans to review documents for the agreement when he returns to Washington today. He added that the agencies are trying to develop a regulatory framework that ensures they are not "stumbling over each other."

The issue is expected to surface at a Senate Energy and Natural Resources Committee hearing tomorrow that will include Salazar and FERC Commissioner Philip Moeller.

Interior is also working to complete final rules to govern regulation of offshore wind, wave and other renewables projects. A group of lawmakers from Delaware, New Jersey, Rhode Island, Maine and elsewhere wrote to Salazar last week expressing concern about how delays in the rule will affect plans for wind projects.

The lawmakers expressed concern that FERC's current ability to permit offshore hydropower projects, combined with the absence of completed MMS rules, will allow "claim jumping" on rights to offshore tracts that wind developers have studied for years.

Oil and gas

Salazar also sought to return fire at critics who say the Obama administration has not done enough to promote domestic energy production, outlining events this week in which he will address oil and gas industry concerns.

In addition to his testimony tomorrow, he plans to travel to New Orleans on Wednesday to participate in a central Gulf of Mexico lease sale that covers 34.6 million acres. The area could produce up to a billion barrels of oil and enough natural gas to supply the United States' homes for a year, he said. He added that 12.5 percent of the revenue will go the Land and Water Conservation Fund to protect open space and build parks.

On Thursday, he said, he plans to meet with the board of directors of the American Petroleum Institute to promote an open dialogue with the oil and gas industry and explore "tremendous areas" to find common ground. "They are and will remain an important part of our energy future; we need to work together on common-sense solutions," Salazar said.

He also noted that the Bureau of Land Management has held seven onshore oil and gas lease sales in the last seven weeks, offering 830 leases that cover almost 1.2 million acres in the West. About 254,000 acres were sold, generating more than $32 million in revenues for U.S. taxpayers, he said. BLM will hold an additional 32 onshore lease sales this year, he added.

Salazar also noted that the U.S. Geological Survey soon will release a report that can help identify the best geologic formations in the country for carbon sequestration.

But at the same time, he did not back down from Obama's plan to repeal several oil-industry tax incentives while imposing new taxes on Gulf of Mexico producers to close "loopholes" that have allowed companies to avoid royalty payments. The overall budget blueprint eliminates $31.5 billion in "oil and gas company preferences" over a decade.

"They are not needed," Salazar said. "It's simply a sense of fairness."

Senate Energy and Natural Resources Committee ranking member Lisa Murkowski (R-Alaska) used the confirmation hearing for Interior deputy secretary nominee David Hayes last week to rail against Obama's energy policies, saying the administration's 2010 budget blueprint is "a war on domestic production."

Salazar said he will travel to Alaska to study development and preservation issues there and has asked Murkowski to accompany him. But he indicated that the Obama administration would not change its stance against drilling in the Arctic National Wildlife Refuge. Murkowski would like to open it to development and has said directional drilling would allow pristine areas to be protected.

Salazar said that from what he has seen so far, directional drilling would not work well enough, but he added that it remains "an open question" and could be discussed. He said the administration sees ANWR as a special place. "There are special and treasured places we will not disturb," he said.

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