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Crosscurrents in offshore waters -- Federal regulators at odds

Clashing permit applications by rival energy companies looking to develop offshore projects has exposed an overlap in authority by two powerful regulatory agencies. Two offshore wind power project developers are being tossed in the crosscurrent.

Until recently, the Minerals Management Service (MMS), an agency under the US Department of the Interior, was considered the sole regulator of all energy projects proposed in federal waters. But when Grays Harbor Ocean Energy from Seattle applied to the Federal Energy Regulatory Commission (FERC) for a 518 square kilometre patch of ocean space off the New Jersey coastline it became clear that there were at least two authorities on the matter.

Grays Harbor applied for permission with FERC instead of MMS in the belief that its technology, which would capture energy from the rise and fall of sea swells, fell under FERC's jurisdiction over all forms of hydropower. The project, however, includes a wind turbine.

Meantime, two offshore wind developers, Bluewater Wind and Deepwater Wind, already had permit applications with MMS for the same area. Further complicating matters, Grays Harbor applied for numerous other preliminary permits with FERC that could secure it exclusive initial rights to hundreds of square kilometres of choice offshore wind sites near Northeast population centres. Delineation between the two agencies' jurisdictions has been unresolved for months, in what industry sources say is a power struggle.

Sceptical

Jim Lanard of Bluewater Wind questions the competing application. "The basic argument is that this appears to be site banking," he says. FERC and other agencies use the term "site banking" to describe any entity moving quickly and unilaterally to establish control of a particular location, often with intention to later sell permits and site control for profit. Lawmakers and others have formally complained to both FERC and MMS about such activities.

Grays Harbor's Burt Hamner dismisses the accusations, calling his company's actions good business decisions. "Rather than people standing on the shore making accusations of claim jumping and site banking, they should be thinking about how can we all collaborate to make this work," says Hamner. He says his wave energy projects can co-exist with a wind farm and since MMS has not finalised its rules for offshore wind, that leaves FERC as the only federal entity with a permitting process in place for offshore wave and hydro projects, even ones that "can evolve into a wind project."

Agreed to agree

Regarding the overlap between the two agencies, Lanard says that when the Federal Power Act was enacted in the 1920s it was likely not the intention to give FERC jurisdiction over all forms of hydropower, including that from waves, tides and ocean currents. "Back then, offshore wind was still really just an idea on an engineer's table," he says. The old regulatory regimes do not work for today's market.

Aware of the potential barrier, the two agencies released a joint statement last month expressing their desire to clarify jurisdiction in offshore energy. "A close reading says that they have now agreed to agree, meaning they will now work together to get to an acceptable memorandum of understanding that works for both agencies," says Lanard. "It's a very significant issue, and it's a very significant force in the right direction."

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