Washington Energy Report
May 1, 2009
On April 22, the Department of the Interior’s Minerals Management Service (“MMS”) approved final regulations to establish a program to grant leases, easements, and rights-of-way (“ROW”) for renewable energy activities on the Outer Continental Shelf (“OCS”). The final rule is effective as of June 29, 2009.
The Outer Continental Shelf Lands Act (“OCSL Act”) authorizes the Secretary of the Interior, acting through the MMS, to grant leases, easements, and rights-of-way on the OCS for the development of oil and gas resources. The Energy Policy Act of 2005 (“EPAct 2005”) amended the OCSL Act to provide the Interior Department with parallel permitting authority with regard to the production, transportation, or transmission of energy from additional sources of energy on the outer continental shelf, including renewable energy sources. Specifically, the Department of the Interior has permitting and development authority over wind power projects that use offshore resources beyond state waters.
In March, MMS and FERC agreed to principles to allow the agencies to finalize a Memorandum of Understanding (“MOU”) regarding each agency’s role in developing renewable energy on the OCS (see March 20, 2009 edition of the WER). FERC has authority over licensing of hydrokinetic projects; but leasing, ROW and easements for all renewables on the OCS fall under MMS authority. MMS also has jurisdiction over offshore wind projects. The final rule reflects the agreement reached in the MOU.
MMS will issue lease access rights for commercial development, site assessment and technology testing. Commercial and limited leases will be available. A commercial lease will give long-term (approximately 30 years) access and operational rights necessary to produce, sell, and deliver power through spot market transactions or a long-term power purchase agreement. A limited lease will give access and operational rights for activities on the OCS that support the production of energy, but do not result in the production of electricity or other energy product for sale, distribution, or other commercial use exceeding a limit specified in the lease.
EPAct 2005 requires MMS to award leases, ROW grants, and right-of-use and easement grants competitively, unless it makes a determination of no competitive interest. Under the new rule, MMS will publish a call for information, designate the lease or grant area, and prepare the environmental compliance documents. The MMS then will publish the final sale notice and hold an auction to award the leases.
The regulations also establish the methods for sharing revenues generated by this program with nearby coastal states. The OCSL Act requires that coastal states receive 27 percent of the revenues received by the federal government from any project located within three nautical miles of shore.
The final rule is available at: http://edocket.access.gpo.gov/2009/E9-9462.htm.
In addition, MMS prepared a Final Environmental Assessment (“EA”) analyzing the rule. The Final EA is available at http://www.mms.gov/offshore/AlternativeEnergy/RegulatoryInformation.htm.