Maine and FERC Sign MOU

On August 19, 2009, the Federal Energy Regulatory Commission announced the execution of a Memorandum of Understanding between FERC and the state of Maine to coordinate procedures and schedules for review of tidal energy projects off the coast of Maine.  Although FERC characterizes the Maine MOU as similar to those signed with Oregon and Washington State, in my view, the MOU with Maine makes a more aggressive commitment to getting pilot projects in the water and provides a more specific procedure for speeding the path to deployment. By contrast, the Washington and Oregon MOUs are somewhat generic in nature; more of a general expression of good will (which is an important benefit, and one which I don’t mean to minimize) than a tangible path to commercialization.

Highlights of the FERC-Maine MOU include:

Support by Maine for FERC’s efforts to establish expedited procedures for short term demonstration projects. This is a significant benefit, because FERC’s ambitious pilot license process (which aspires to issue short term licenses (five years with option to renew) for small, early stage projects within a year) can’t work without cooperation from the states.

An agreement that pre- and post-licensing studies for pilot projects will be reasonable in scope and commensurate with the limited size and duration of the projects. The marine energy industry has long sought to incorporate priniciples of proportionality into licensing, recognizing that a small array of buoys or turbines won’t have the same impact as a hundred megawatt dam and thus, shouldn’t be subject to the same study requirements.  The MOU adopts the proportionality principle and indeed, is one of the first official documents to do so that I’ve seen.  Mega-kudos to Maine and FERC for this provision

An understanding that FERC will take into account offshore wind sites designated by Maine in issuing preliminary permits. Again, another win here. In the past, some companies have applied for hydro-kinetic permits on prime wind real-estate merely to hold the sites hostage and extract a payoff from a wind company to develop them. FERC’s willingness to take a broader view when issuing permits promotes coordinated development of all offshore renewable resources.A commitment by Maine and FERC to develop a schedule and milestones for processing hydro-kinetic tidal applications and to abide by it to the extent feasible. A uniform schedule should be a no brainer, yet many agencies are reluctant to accept any firm deadlines.   So, good for Maine for its willingness to at least make a good faith effort to stay on schedule in processing applications.

An agreement that pre- and post-licensing studies for pilot projects will be reasonable in scope and commensurate with the limited size and duration of the projects. The marine energy industry has long sought to incorporate priniciples of proportionality into licensing, recognizing that a small array of buoys or turbines won’t have the same impact as a hundred megawatt dam and thus, shouldn’t be subject to the same study requirements. The MOU adopts the proportionality principle and indeed, is one of the first official documents to do so that I’ve seen. Mega-kudos to Maine and FERC for this provision.

An understanding that FERC will take into account offshore wind sites designated by Maine in issuing preliminary permits. Again, another benefit for all parties involved.  In the past, some companies have applied for hydro-kinetic permits on prime wind real-estate merely to hold the sites hostage and extract a payoff from a wind company to develop them.  FERC’s willingness to take a broader view when issuing permits promotes coordinated development of all offshore renewable resources.

A commitment by Maine and FERC to develop a schedule and milestones for processing hydro-kinetic tidal applications and to abide by it to the extent feasible. A uniform schedule should be a no brainer, yet many agencies are reluctant to accept any firm deadlines.  So, good for Maine for its willingness to at least make a good faith effort to stay on schedule in processing applications.

An agreement to issue a Section 401 water quality certificate (WQC) within 60 days. Quite frankly, a provision to cap the amount of time for issuing a Section 401 WQC is unprecedented.  Usually, the issuance of a WQC bogs down a proceeding but there was little that could be done to remedy this problem because even federal law provides agencies with up to a year to render a decision on a WQC.  Here, Maine’s willingness to accept less time to issue a WQC (pursuant to state legislation) represents a new approach and removes a huge obstacle to expeditious deployment of pilot projects.

Designation of management contacts. One of the hardest aspects of siting projects for a developer is coordinating all of the moving parts at the different agencies and resolving disputes.  Under the MOU, FERC and Maine will designate contacts to resolve procedural issues which will ensure that processes don’t get bogged down through disagreements.

In spite of these benefits, there’s one aspect of the FERC-Maine MOU that concerns me.  Specifically, the MOU focuses exclusively on tidal power and does not mention the wave resource at all.  It may be that Maine’s wave resources are not currently viable, but at the same time, it doesn’t make sense to go to the trouble of developing an MOU that applies to one type of marine renewable technology (tidal) but not another (wave).

In addition, the MOU applies only in state waters up to three miles offshore and not further out on the OCS. Of course, given that the MOU covers tidal resources, the geographic limitation makes sense since tidal resources are near shore.   Though originally, I criticized Oregon MOU for not covering waters further offshore or involving MMS in the MOU, I’ve since reconsidered. The licensing process has to start somewhere and it’s far more manageable to negotiate an MOU in state waters where FERC and the states are the main players than to go further offshore and figure out how to work MMS into the agreement.

Still, at the end of the day, the proof is in the pudding – or more accurately, the putting. Ultimately, we won’t know if the FERC-Maine MOU is a success until we see whether it results in putting projects in the water.

Note:  For more about some of the projects and developers hoping to capitalize on the FERC/Maine MOU, see here.