On Monday, Secretary of the Interior Ken Salazar and FERC Chairman Jon Wellinghoff agreed to principles that will allow the agencies to finalize a Memorandum of Understanding (“MOU”) regarding each agency’s role in developing renewable energy on the Outer Continental Shelf (“OCS”).

The agencies have previously tried to reconcile FERC’s licensing authority for hydropower with the Interior Department’s Minerals Management Service (“MMS”) jurisdiction over projects on the OCS. However, attempts to reach a formal agreement failed during the Bush administration.

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 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.

Under the Federal Power Act, FERC has the statutory responsibility to oversee the development of hydropower resources in navigable waters of the United States. “Hydrokinetic” power potentially can be developed offshore through new technologies that convert wave, tidal and ocean current energy to electricity.

Under the agreement, the MMS will have authority to permit and develop wind projects on the OCS. FERC will have the primary responsibility to manage the licensing of hydrokinetic projects in offshore waters, using procedures developed for hydropower licenses, and with the active involvement of relevant federal land and resource agencies, including the Department of the Interior.

At a Senate Energy and Natural Resources Committee hearing on Tuesday, Senator Jeff Bingaman (D-NM), the committee chairman, expressed skepticism on the feasibility of the MOU, especially when hydrokinetic and wind developers have their eyes on developing the same site. He asked FERC Commissioner Philip Moeller about the need to codify any provisions outlined in the MOU. Commissioner Moeller stated that he thinks the two agencies can iron out the differences without congressional involvement.

A detailed MOU will be released soon, which will describe the process by which permits and licenses related to renewable energy resources in offshore waters will be developed.