BOEM And FERC Issue Revised Guidelines For Offshore Hydrokinetic Energy Development

On July 19, 2012, the U.S. Bureau of Ocean Energy Management ("BOEM") and the Federal Energy Regulatory Commission ("FERC") issued revised guidelines for the development of marine and hydrokinetic energy ("hydrokinetic") projects, which include wave, tidal and ocean current projects on the Outer Continental Shelf ("OCS"). These guidelines replace the existing guidelines issued jointly by BOEM and FERC in 2009 as part of the Memorandum of Understanding ("MOU") to clarify the agencies' potentially conflicting and overlapping jurisdictional responsibilities. As established in the 2009 MOU, BOEM has jurisdiction to issue leases for hydrokinetic projects, while FERC has jurisdiction to issue licenses for those projects.

Who can hold a lease and license for a hydrokinetic project on the OCS?

Under the Federal Power Act and the Outer Continental Shelf Lands Act, a U.S. citizen or association of U.S. citizens, a corporation organized under the laws of the U.S. or any state, or a state or municipality may seek a lease or license to develop a hydrokinetic project. A lease is required if the project will be located on the OCS, will support the production, transportation or transmission of energy, and will involve attaching a structure or device to the seabed. All nonfederal hydrokinetic projects also require a FERC license, except for those projects that receive a limited testing lease from BOEM and are short-term, experimental or educational, or projects that will not transmit electricity to the grid. FERC may also grant certain waivers or modifications to allow for the expedited processing of a pilot project license if the project is small, short term, or not located in sensitive areas, among other factors. Pilot project licenses may be transitioned to standard licenses.

What are the types of leases issued by BOEM?

BOEM issues three types of leases: (i) commercial leases; (ii) limited leases; and (iii) research leases. Commercial leases have a term of 25 years, although longer terms may be negotiated with BOEM. Leases are issued on a competitive basis pursuant to BOEM's regulations, 30 C.F.R. §§ 585.210-.225. Limited leases are valid for 5 years and are issued on a case-by-case basis for projects with a limited scope or duration. Research leases are also issued on a case-by-case basis and will only be issued to a federal or state entity for renewable energy research activities that support the future production, transportation or transmission of...