EVAN LEHMANN, The New York Times, March 17, 2009
The oceans might not be big enough for sharp-elbowed renewable energy developers. Aspiring power producers are claiming sweeping stretches of sea along the East Coast, sometimes overlapping each other and igniting modern-day allegations of “claim jumping.”
Open water miles from shore is the newest frontier for prospectors, as vague notions persist about who in the federal government presides over the ocean depths. A jurisdictional dispute between two federal agencies — the Department of Interior’s Minerals Management Service and the Federal Energy Regulatory Commission — is encouraging a “Wild West” atmosphere, as one participant described the accelerating race to grab chunks of seafloor for energy development.
The impasse has led competing prospectors to claim the same areas of ocean off New Jersey’s coast, citing authority from different federal agencies. Wind developers are accusing Seattle-based Grays Harbor Ocean Energy Co. of taking advantage of the regulatory uncertainty to snatch a 200-square-mile swath of ocean for a proposed wave and wind energy project through FERC.
Smaller patches within that area had already been identified for wind farms approved by the state and been given a preliminary green light by MMS.
“They are all around us,” Chris Wissemann, founder of Deepwater Wind, said of Grays Harbor. State regulators awarded development rights to Deepwater Wind last fall to build a 350-megawatt wind farm about 20 miles off the shore with PSEG Renewable Generation.
But now the Grays Harbor site is “completely overlapping” the smaller 20-square-mile area of ocean identified by Deepwater Wind, Wissemann added, noting that his project is at “full stop.” The sprawling Grays Harbor parcel also encompasses a second wind project, proposed by Bluewater Wind, which plans to erect about 100 turbines over 24 square miles.
Wind developers and state officials are pressing FERC to deny Grays Harbor’s permit. A decision could come this spring.
‘Wild West’ goes to sea
The confusion is the offspring of dueling federal agencies. The Minerals Management Service is generally considered the landlord of the ocean floor, and has been working for three years on new rules to provide leases for wind farms on the outer continental shelf. There is no dispute about its authority over wind projects, as outlined in the Energy Policy Act of 2005.
But the Federal Energy Regulatory Commission has been arguing for two years that it maintains jurisdiction over hydrokinetic projects — those that tap the power of waves and currents — under the Federal Power Act.
That leaves developers of both wind and wave technologies vulnerable to each other. Preliminary permits are easy to get, and that can lead to “a lot of gamesmanship” in areas known to have good energy prospects, said Carolyn Elefant, a lawyer with the Ocean Renewable Energy Coalition.
“There are a lot of people who have these visions of flipping sites, selling sites, jumping claims and making people buy them off,” she said. “It’s the Wild West.”
That “back and forth” struggle between the two agencies stalled the release of MMS’s new rule on offshore renewable energy projects at the close of George W. Bush’s presidency, according to Michael Olsen, a former deputy assistant secretary in the Interior Department, who worked on the rule. Developers say the delay has prevented the offshore industry from growing.
“There was a tremendous push at the end of the last administration” to finalize the rule, Olsen said an event sponsored by the Energy Bar Association yesterday. “And it was delayed because of this dispute.”
‘Permit flippers’ vs. ‘mafiosos’
Grays Harbor is at the center of that storm. Run by Burton Hamner, who has experience in coastal management, the company in October plunged into the race to build the first offshore power generation project on the East Coast.
It applied for six interim leases from FERC, a move that would give it priority over hundreds of square miles off the coasts of Massachusetts, New Jersey, Rhode Island and several other states. The move could essentially secure those areas for three years, sidelining other wind companies that had already gone through a competitive selection process with the state of New Jersey and that are now waiting on the MMS rule before moving forward.
“I could literally have my equipment on a boat and receive a letter from FERC saying, ‘You have no right to do this because we have a competing set of regs,'” said Wissemann of Deepwater Wind, which might wait to build a data-collecting test tower until the dispute is settled.
A group of nine U.S. lawmakers, mostly from the East Coast, assailed Grays Harbor’s move — without mentioning the company — as “claim jumping” in a letter last week to Interior Secretary Ken Salazar. Some wind developers are furious, saying Hamner is “site banking” stretches of ocean with an eye toward trading in real estate, not clean energy.
“They’re looking to flip the permits,” said one official with a wind developer.
But Hamner dismisses those accusations as if they’re insults from entitled lawmakers or bested competitors acting like bossy “New Jersey mafiosos.”
Salazar pushing for a fix
He describes his maneuvering as a good business decision, one that fits within existing rules. He is not a claim jumper, he says, because MMS has not issued the rule needed to receive leases — an assertion with which his competitors have no choice but to agree.
“You can’t say somebody else is claim jumping when you haven’t in fact made a claim,” Hamner said. “All they’re doing is sitting there on the shore saying, ‘Hey, we were here first. What’s this guy doing messin’ in our sandbox?'”
He is unapologetic about applying for interim permits under FERC, days after the commission underscored its jurisdiction over hydrokinetic (wave power) projects in October. Nor does he feel burdened by exploiting the turf battle in Washington. FERC, he says, is the rightful overseer of electricity projects.
“They could have done the same thing that I did,” Hamner said of other developers. “The ocean’s got a lot of opportunity. There’s room for everybody. What we don’t want to have is people standing on the shore who’ve got the attitude of New Jersey mafiosos saying that’s their playground.”
Hamner is eligible for a FERC permit because he’s emphasizing wave power. At each of his seven sites, he proposes raising 100 platforms, each with three legs. Every leg will carry a 330-kilowatt generator, providing about 10% of the 1,100 megawatts produced by each project. Hamner plans to find the bulk of his electricity through wind turbines, big, 10-megawatt units on each platform.
The territorial dispute, meanwhile, is rising to a new level of urgency in Washington. Salazar said he hopes to draft a long-delayed memorandum of understanding with FERC, perhaps as soon as today. That could prevent the agencies from “stumbling over each other,” he told reporters on a conference call yesterday.
“We will not let any of the jurisdictional turf battles in the past get in the way with moving forward with our energy agenda,” Salazar said.
The MMS rule regarding leases could follow soon if the inter-agency dispute is settled. That’s considered a key requirement for sparking a robust offshore industry.
“They just need to work it out,” said Laurie Jodziewicz, manager of siting policy for the American Wind Energy Association. “We have some real projects that are being held up right now.”
Yet Olsen, the former official with Interior who worked on the rule, expressed doubt yesterday that Salazar would be able to quickly disarm the two sides. Congress might have to draft new legislation, he predicted, or perhaps President Obama’s new energy czar, Carol Browner, could muscle a jurisdictional remedy into place.
“It’s going to be the same thing,” Olsen said, recalling past challenges to fixing the problem. “Something’s gotta happen.”