Wave new world: promoting ocean wave energy development through federal-state coordination and streamlined licensing.

AuthorSherman, Mark
  1. INTRODUCTION II. WAVE ENERGY CONVERSION: TECHNOLOGICAL AND ENVIRONMENTAL CONSIDERATIONS A. Types of WEC Devices in Development. B. Potential Environmental Effects C. Dominant Environmental Laws that Apply to WEC Devices III. JURISDICTIONAL JUMBLE A. Location, Location, Location: Overview of the FERC-MMS Jurisdictional Dispute B. FERC's Jurisdiction over Hydropower Projects C. Murky Waters: FERC's Basis for Asserting Jurisdiction over Wave Energy Projects D. MMS's Basis for Asserting Jurisdiction over Hydrokinetic Projects Located on the OCS E. Lost Opportunity to Calm the Waters IV. WHICH AGENCY'S REGULATORY SCHEME IS BETTER? A. FERC's Licensing Process for Wave Energy Projects 1. The Hydrokinetic Pilot Project License Process and Conditioned Licenses 2. Choppy Waters: How Not to Coordinate the WEC Licensing Process 3. Good FERC, Bad FERC: Post Makah Bay Developments B. MMS's Proposed Rule for OCS Alternative Energy Projects 1. States' Views of the Proposed Rule 2. The Ocean Energy Industry's View of the Proposed Rule 3. MMS and the OCS According to FERC C. Rising Tide of Cooperation: Everybody Wins? 1. The FERC-MMS MOU 2. The Final Rule 3. FERC and MMS Offer Guidance D. Another Option: Jettison FERC and Leave WEC to the States and MMS V. WAVE OF THE FUTURE: STREAMLINING WAVE ENERGY LICENSING WITH A ONE-STOP SHOP A. OTEC Act: A Forgotten Model of Federal One-Stop Licensing B. Other Federal One-Stop Programs C. State Models of Streamlined Permitting. D. Regulatory Streamlining in Denmark VI. FINDING THE PERFECT WAVE ENERGY CONVERSION ACT A. Make the States Equal Partners in Siting Wave Energy Projects B. Federal Support for Research and Development of Wave Energy C. Financial incentives VII. CONCLUSION I. INTRODUCTION

    With colorful names like AquaBuOY, (1) CETO, (2) Pelamis, (3) Wavebob, (4) and Wave Dragon, (5) wave energy conversion (WEC) devices are ready for prime time, and wave energy is generating excitement as one of the most promising of the emerging renewable energy sources. In development around the world, a plethora of WEC devices battle to prove their technological supremacy. Members of the European Union have caught the wave, and Portugal recently laid claim to the first operational wave energy park that now produces a modest amount of electricity powering a thousand homes. (7) In the United States, wave power could add considerably to the U.S. energy supply, (8) and it "could be among the most environmentally benign electricity-generation technologies yet developed." (9) Wave energy, formed by wind currents passing over open water, has advantages over its better known and more developed cousin wind energy, such as the higher energy density of water compared to windy Most importantly, wave energy is not intermittent like wind, and this greater reliability makes it easier to integrate into the electric transmission grid. (11)

    Yet, however exciting the possibilities for wave energy development may be, the current regulatory framework in the United States creates an unfavorable climate for the commercial development of WEC. Critics describe this framework as "a patchwork of policies" (12) that is "unclear or unfavorable" (13) and "destined for conflict," (14) largely because of the unanswered question of which federal agency has primary authority over wave energy projects located beyond state territorial waters (from three to nine nautical miles (15) from shore) on the outer continental shelf (OCS). However, after more than three years of interagency squabbling in which both the Federal Energy Regulatory Commission (FERC) and the Department of the Interior's Minerals Management Service (MMS) claimed this jurisdictional authority, the two agencies reached an agreement in 2009 that is an important first step toward regulatory certainty for WEC developers. (16)

    By way of a "murky but landmark decisio" (17) in 2003, FERC proclaimed its authority to license offshore hydrokinetic (18) projects in all territorial waters of the United States out to twelve nautical miles from shore. (19) According to FERC, the Federal Power Act (FPA) (20) and a Presidential Proclamation (21) issued in 1988 by President Reagan that extended the territorial sea to twelve nautical miles from the coastal baseline (22) give FERC permitting and licensing authority over these projects. (23) As for projects located in state waters out to three nautical miles (or nine for the gulf coasts of Texas and Florida), FERC's preemptive authority over the states regarding the licensing of hydroelectric projects located on navigable waters under the FPA (24) has not been seriously challenged.

    Critics note that FERC "has limited expertise with the multijurisdictional world of coastal waters" (25) and "is not an agency with a broad ocean management mission." (26) Yet FERC's strength is its energy expertise, and it has shown a willingness to think outside the conventional hydropower box by implementing a hydrokinetic pilot project licensing process (27) intended to make it easier to launch small test projects of under five megawatts that may actually connect to the power grid. (28) However, the pilot program is not without its critics. For example, several organizations complained that FERC was circumventing section 553 of the Administrative Procedure Act (29) by choosing not to conduct a rulemaking to determine basic license conditions. (30) The pilot program also raises questions about how to ensure environmental oversight and balance offshore energy development with competing ocean uses such as commercial fishing. (31) Moreover, coastal states may be better suited to handle siting and licensing decisions in state waters than a federal agency with little knowledge of local conditions. (32)

    While FERC was taking steps to encourage wave energy development, MMS methodically proceeded to develop rules and procedures for its offshore alternative energy program that were necessitated by the enactment of section 388 of the Energy Policy Act of 2005 (EPAct). (33) The EPAct gave the Secretary of the Interior authority to grant leases, easements, or rights-of-way for activities on the OCS that produce energy from sources other than oil and gas. (34) The Secretary delegated this authority to MMS, which thus claims jurisdiction over all alternative energy projects, including wave energy, sited on the OCS. (35) However, section 388 contains a savings clause limiting this authority to activities not subject to other applicable federal law, (36) an argument FERC uses to support its claimed authority out to twelve nautical miles from shore. (37) MMS disputes FERC's expansive reading of the FPA and the Presidential Proclamation, arguing that FERC does not have jurisdiction over projects located beyond the traditional three mile boundary of the U.S. territorial sea. (38) Some see MMS as a "welcoming landlord" for wave energy projects because of its pro-development history and expect its program to reflect industry recommendations. (39) The agency issued its long-awaited notice of proposed rulemaking in July 2008, in which MMS laid out its program for alternative energy leasing on the OCS in detail, while incidentally acknowledging the dispute with FERC and reasserting its jurisdiction. (40) While FERC and MMS previously discussed a memorandum of understanding (MOU) regarding these competing jurisdictional claims, and numerous commentators had urged an accord, (41) there seemed to be no resolution in sight. (42) However, in the spring of 2009, FERC and MMS, facing pressure from the new administration, (43) agreed to end their dispute, resurrecting the MOU. (44) Shortly thereafter, MMS issued its final rule (45) in April 2009, followed by the August 2009 joint issuance by FERC and MMS of a guidance document providing additional details about how the agencies plan to work together. (46)

    Compounding the uncertainty engendered by the long-standing jurisdictional standoff, a would-be wave energy developer must also navigate through a dizzying array of other federal and state laws that may apply to wave energy projects, such as the Coastal Zone Management Act (CZMA). (47) This adds further confusion to the regulatory process, erecting additional barriers to project development that could involve huge investments of time and money and further dampens the willingness of investors to move forward. (48)

    This Comment examines the recent regulatory disarray and concludes that, despite the apparent FERC-MMS solution to the jurisdictional division over wave energy projects, federal ocean wave energy conversion legislation is still needed to create a regulatory framework with clear standards and procedures. Moreover, the better jurisdictional solution would be legislation that explicitly removes FERC from any licensing authority for wave energy projects located on the OCS and designates coastal states as the licensing authorities for wave energy projects sited in state waters. Such legislation should also reconfirm MMS as the "one-stop" lead agency for the permitting and licensing of all wave energy projects within the OCS and require the agency to refine its final rule with provisions specific to the unique aspects of this renewable energy source. Certain features of the Ocean Thermal Energy Conversion Act of 1980 (OTEC Act), (49) in which Congress established a comprehensive licensing scheme for proposed ocean thermal energy conversion (OTEC) facilities administered by a single lead agency, (50) can serve as a model of how to create such a streamlined permitting process. In addition, streamlined permitting processes on the state level, such as Washington state's one-stop Joint Aquatic Resource Permit Application (JARPA) (51) process for environmental permitting and the similar permitting process for power plant licensing created by the California Energy Commission, (52) provide creative examples of interagency cooperation Congress could mandate for wave...

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