Agencies strike deal on leasing, licensing offshore projects

The Interior Department will issue leases for offshore wave and current energy development, and the Federal Energy Regulatory Commission then will license projects, under an agreement signed today.

Ending a longstanding conflict over which agency oversees offshore alternative energy, Interior Secretary Ken Salazar and FERC Chairman Jon Wellinghoff signed a memorandum clarifying their agencies' responsibilities for leasing, licensing and regulating all renewable energy projects on the outer continental shelf.

Under the agreement, Interior's Minerals Management Service has exclusive jurisdiction over the production, transportation or transmission of energy from offshore wind and solar projects. MMS and FERC will share responsibilities for hydrokinetic projects, such as wave, tidal and ocean current.

MMS will issue leases, easements and rights of way for offshore areas for hydrokinetic projects. The agency will conduct any necessary environmental reviews related to those actions, including those under the National Environmental Policy Act.

FERC will issue licenses and exemptions from licensing for the construction and operation of offshore hydrokinetic projects and will conduct any necessary environmental analyses for those actions. But FERC's licensing process will actively involve relevant federal land and resource agencies, including Interior, the agencies said.


An applicant must first receive a lease from MMS for a site before FERC could issue a license for a project there. FERC will not issue preliminary permits for offshore projects, the agencies said. MMS will require that construction and operation cannot begin without a license or exemption from FERC, except when FERC notifies MMS that one is not required.

Both agencies may inspect offshore hydrokinetic projects to ensure compliance with the leases or licenses.

Each agency can choose at its own discretion to become a cooperating agency in the other's preparation of an environmental analysis. The agencies also will coordinate to ensure that operations regulated by FERC comply with all applicable laws, the agencies said.

"This agreement will spur the development of clean, renewable energy -- the growth industry of the 21st century," Salazar said in a statement. "Our nation's economic future demands we lead that competition."

Wellinghoff added, "By removing all the regulatory barriers to the development of hydrokinetic energy in the outer continental shelf, this agreement will advance the development of a promising renewable resource that in the end will benefit consumers."

Interior has permitting authority under the Energy Policy Act of 2005 over the production and transmission of renewable energy sources on the outer continental shelf. FERC oversees development of hydropower resources, including wave, tidal and ocean current energy.

Interior and FERC have been at odds for years over regulation of fledgling efforts to develop energy from offshore waves and currents.

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 MMS's jurisdiction over projects on the federal outer continental shelf.

Last month, the agencies floated the possibility of today's agreement. But lawmakers, including the chairman and ranking member of the Senate Energy and Natural Resources Committee, have questioned whether the agreement would lead to a suitably streamlined process. They said that when the committee writes an energy bill, it will have to decide whether to legislate a solution to the jurisdictional dispute.

Click here to read the memorandum.

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