Energy and Minerals Resources Bills

STATEMENT FOR THE RECORD

BUREAU OFOCEANENERGY MANAGEMENT, REGULATION AND ENFORCEMENT

UNITED STATESDEPARTMENTOFTHEINTERIOR

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

COMMITTEEON NATURALRESOURCES

HOUSEOFREPRESENTATIVES

June 23, 2011

Mr. Chairman, and Members of theCommittee, theBureau ofOcean EnergyManagement, Regulation and Enforcement (BOEMRE) submits the following statement for the record to discuss its renewable energyprogram, efforts to facilitate andexpeditethedevelopment oftheNation's offshorewindenergyresources, and comments on two bills before the committee, H.R. 2170, the Cutting Federal Red Tape to Facilitate Renewable Energy Act, and H.R. 2173, the Advancing Offshore Wind Production Act.

These bills were introduced little more than one week ago, so the Department of the Interior has not had time to conduct an in-depth analysis of them, but we appreciate the opportunity to outline our general views at this time. The bills exempt certain federal actions from compliance with the National Environmental Policy Act (NEPA) – the cornerstone law guiding environmental protection and public involvement in federal actions. The Department opposes these two bills.

OuterContinental Shelf(OCS)WindResources andEnergy DevelopmentGoals

BOEMRE manages theenergyand mineral resources oftheOCS, which comprises some1.7 billion acres ofsubmerged lands generallylocated between three and 200 nautical miles offthecontinental U.S., Alaska, and
Hawaii. TheU.S.Department of Energy(DOE) estimatesthat thetotal offshorewind potential is over4,000 gigawatts (GW) forareas up to 50miles from shorewith averagewind speeds ofseven meters per second orgreater at 90-meter elevation. This estimateincludes theresources of the
Great Lakesand thecoastal submerged lands understatejurisdiction, which arenot managed by BOEMRE. However,OCSlands constitutethevast majorityofwhat DOE considers "offshore"in its wind energyestimate.

Accordingto areport prepared and issued jointlybyDOE's OfficeofEnergy Efficiencyand RenewableEnergyand BOEMRE earlierthisyear, each averageGWof wind powercapacitycangenerate3.4 million megawatt-hours ofelectricityannually.[1]

This amount of power would replace the use of 1.7 million tons of coal or 27.6 billion cubic feet of natural gas and reduce the carbon emissions associated with those fossil fuels by 2.7 million metric tons. The Nation's vast offshore wind resources are located close to our largest electricity demand centers, allowing offshore wind to compete directly with fossil fuel-based electricity generation. Northeastern and Mid-Atlantic coastal states especially can benefit from OCS wind resources to meet ambitious renewable energy portfolio standards and related policy goals calling for the use of a stable and clean supply of energy resources for electrical generation.

In addition to these energy and environmental benefits, offshore wind energy development would have considerable direct and indirect economic benefits. The National Offshore Wind Strategy suggests that offshore wind development would create approximately 20.7 direct jobs per annual megawatt installed in
U.S. waters. Many of these jobs would be located in economically depressed port areas that could become important fabrication and staging areas for the manufacture, installation, and maintenance of offshore wind turbines.

TheNational Offshore Wind Strategyaddressesthesegoals and discussesthree focus areas that arecentral to achievingthem—(1)technologydevelopment, (2)market barrierremoval,and (3)advanced technologydemonstration. BOEMRE is working closelywith DOE and with other federal agencies,state, local, and tribalgovernments, and otherstakeholders toestablish an effectiveprocess forsitingand permittingoffshore renewable energyprojects.

OCSRenewableEnergy RegulatoryFramework

TheEnergyPolicyAct of2005 provided theSecretaryoftheInteriorwiththe authorityto administeran OCSrenewableenergyprogram. This authority, includingthe mandateto promulgatenecessaryregulations, wasdelegated toBOEMRE (then the Minerals Management Service)in March 2006. In early2009, at thestart oftheObama Administration, adraft rulehad been issued, butafinal regulatoryframework was notyet promulgated. On taking office, SecretarySalazaraddressed theremaining issues, leading to thepublication ofBOEMRE's final OCSrenewable energyregulatoryframework on April 29, 2009.

The regulatoryframework is a comprehensiveapproach to managingthefull life cycleofOCSrenewableenergyactivities, from initial studyand leasing, through site characterization and assessment and project construction and operation, ultimatelyto cessation and decommissioning. Theregulatoryframework reflects a renewable energy program which embraces a "life cycle" approach that encompasses:

• Coordination through task forces established with state, local and tribal governments;
• Lease and grant issuance including competitive and non-competitive leasing as well as commercial and limited leases;
• Plans and operations oversight, including site assessment, construction and operations, and general activities plans, plan approval, and environmental and safety monitoring and inspections;
• Payments to cover bonding activities; and
• Decommissioning at the end of a project's life span.

Additionally, key mandates for the Renewable Energy Program include:

• Safety;
• Protection of the environment;
• Coordination with affected State and local governments and Federal agencies;
• Collecting a fair return for the use of Federally-o
  wned resources ; and
• Equitable sharing of revenue with States.

With over20 existinglaws and ExecutiveOrdersthat applyto theOCS, consultation and coordination is critical to asuccessful renewable energyprogram. As BOEMRE strives to facilitatesustained development ofadomesticoffshorewind industry, weareworking with awide arrayofstakeholders to find ways foroffshorewind projects to proceed with minimal adverseeffects on otheruses and resources. Ourmost valuable consultation and coordination tools haveproved to bethe state-by-stateintergovernmental task forces that wehaveestablished. Thesebodies bring together all interestedand affectedgovernment parties to facilitateinformation sharing and fosterinformed andefficient decision-making with the goal of advancing environmentally responsible offshore renewable energy development. To date, wehaveninetask forces on theAtlantic coast that arehelping BOEMRE to proceed with commercialwind energy leasing,as well as oneonthePacific coast that may focus on marinehydrokinetic energy development.

SincetheOCSrenewable energyregulatoryframework was established in2009, SecretarySalazar andBOEMRE havesought to outline, refine, and streamlineoursiting and permittingprocessesforwind leasingand development. BOEMRE haslaunched several initiatives to support our efforts as summarizedbriefly below.

AtlanticOffshoreWindEnergy Consortium

Inearly2010 SecretarySalazarinvited thegovernors oftheAtlantic coast states to join with theDepartment of theInteriorin an AtlanticOffshoreWind Energy Consortium (AOWEC) forthepurposeoffacilitatingfederal-state cooperation and coordination fortheefficient, expeditious, orderly, and responsibledevelopment ofwind resources alongtheAtlantic coast. On June8, 2010, theSecretaryand 11governors signed aMemorandum ofUnderstanding(MOU)outliningthescope and objectives of theConsortium and establishingworking groups charged with formulating an action plan addressingissues relating to: (1)sitingand permitting, (2)dataand science,and (3) investment in infrastructure. DOE is serving an advisoryroleto BOEMRE byassessing national infrastructureinvestment requirementsas described in theNational Offshore Wind Strategy. Theaction plan was completed inFebruaryofthisyear, and BOEMRE is consideringits recommendations, which relatetoimprovingcoordination, implementing pilot projects, revising existingstatutoryand regulatoryauthorities to streamline permitting, and improvingdata acquisition and sharing.

SmartfromtheStartAtlanticWindInitiative

On November23, 2010,SecretarySalazar announced Smart from theStart, a program to expedite commercial wind leaseissuanceon theAtlanticOCS. This initiative has threemainelements:

• Streamlined processes, includingmoreefficient National Environmental Policy Act (NEPA)compliancereview, for renewable energyleaseissuance;
• Identification ofWind EnergyAreas (WEAs) followed byinformationgathering to stimulateinvestment in AtlanticOCSwind leasingand development; and
• ProcessingofOCSenergytransmission lineproposals on aparallel but separate track fromgeneration projects.

Work has begun to identifyas WEAs those areasoftheOCSthat havehigh wind energyresourcepotentialand relativelylow potential use conflicts. BOEMRE will then conduct an environmental assessment (EA)to analyzepotential impacts associated with issuingleasesand conductingsite characterization and assessment activities. IftheEA leads to a findingofno significant impact, wewillbe ableto issueleases and will not haveto preparean environmental impact statement (EIS). This will allow developers to acquireleases on anexpedited basis and enablethem to acquirenecessaryfinancingof theirprojects. BOEMREwill conduct a full EISwhen thelesseesubmits a construction and operations plan forreview.

Smart from theStart also calls forenhancedcoordination on offshorewindwithin the federalgovernment. TheDepartment of theInteriorhas led theformation of the AtlanticOffshoreWindInteragencyWorkingGroup—which includes executivelevel officials ofDOE, Commerce,Defense, HomelandSecurity, theEnvironmental Protection Agency, theCouncil onEnvironmental Qualityand other federal agencies—to facilitate thesharingofrelevant data. In response to our January 2011 data call to the Working Group, we received 180 entries from our federal partners. BOEMRE will use these data sets when conducting environmental analysis and during the identification and modification of WEAs, and when possible, we will share this data publicly through the Multipurpose Marine Cadastre.

Smart from theStart has been well received byfederal and statestakeholders and theoffshorerenewable energyindustry.

Additional CooperationwithOtherFederal Agencies

BOEMRE is also workingwith interested federalagencies to establish agreements to facilitate coordinationon OCSrenewableenergydevelopment. Forexample, we havein place an MOU with DOE to facilitate andexpediteOCSwind and hydrokinetic development. Consistent with this MOU, DOE is makingavailableup to $50.5 million over5years to develop offshorewind technologyand to reducespecificmarket barriers to its deployment. We also have an established MOU with the National Oceanic and Atmospheric Administration (NOAA) on OCS energy development and environmental stewardship, a MOU with theU.S. Fish and Wildlife Service concerningtheMigratory Bird TreatyAct and aMOUwith theFederal Energy RegulatoryCommission regardingtheleasingandlicensingofmarinehydrokinetic projects. OtherMOUs in development arewith theDepartment ofDefense(Secretary), the ArmyCorps ofEngineers, and theU.S. Coast Guard. Weareconfident that theseinter-agency groups will ultimately improve permittingprocessesand promote efficient and effective decision-making.

BOEMREResearchand Studies

BOEMRE has two main scientific research programs. The Environmental Studies Program (ESP) has completed numerous research projects and has several more that are planned or ongoing to determine and evaluate the effects of OCS activities on natural, historical, and human resources and the appropriate monitoring and mitigation of those effects. For example, the ESP has completed or is conducting a number of scientific studies that explore the potential effects of offshore wind projects on birds, marine species, and other aspects of the environment. BOEMRE and DOE co-fund a number of studies within ESP and also partner on research efforts led by the International Energy Agency. Pursuant to the MOU mentioned above, DOI and DOE have also formed an interagency working group with other federal agencies including NOAA, Department of Defense, Army Corps of Engineers, and the Department of the Navy which will facilitate an integrated national network for characterization of offshore wind resources and design conditions. BOEMRE's Technology Assessment and Research (TA&R) Program also conducts research associated with operational safety, engineering standards, and pollution prevention.

Onenoteworthyresearchproject just completed underourTA&Rprogram ison OffshoreWind EnergyTurbineStructural and OperatingSafety. BOEMRE asked the National Research Council's MarineBoard to conduct astudyrelatingto thestructural safetyofoffshorewind turbines. Thestudyaddresses threespecificareas: (1)standards and guidelines fordesign, fabrication and installation ofoffshorewind turbines; (2) expected roles ofthird-partyentities, called Certified Verification Agents (CVA), in overseeingthedesignand construction ofoffshorewind turbines and identifying standards formonitoring,inspection and complianceverification; and (3)expected qualifications to be considered arecognized CVA. BOEMRE received thefinal report on April 28, 2011, and is in the process of analyzingthe recommendations to determinewhetherto modify the relevant offshorerenewableenergyregulations.

TheNational OceanPolicy's Coastal andMarineSpatial Planning

BOEMRE is implementingtheOCSrenewable energyprogram in accordance with ExecutiveOrder13547, which President Obamaissued in 2010 to establish a comprehensiveand integrated national policyforstewardship of theoceans, our coasts and theGreatLakes, includingaframework for coastal and marinespatial planning (CMSP). We fullyunderstand and support theneed to work togetherwith all OCSusers and regulators,and welook forward to coordinatingwith theNational Ocean Council and leading and participating in regional planningbodies undertakingCMSP. Webelieveour intergovernmental task forces areavaluablevehicle forinformingthese efforts. Wewill use an integrated interagencymarineinformationsystem, developed in collaboration with theNational Ocean Council, to implement ExecutiveOrder13547. Part ofthis system will betheMultipurposeMarineCadastre, whichprovides legal, physical,ecological, and cultural information in acommon geographicinformation system framework. This tool was created in partnership with NOAA to complywith amandatein section388 of the EnergyPolicyAct of2005.

Outreachto Non-governmentalStakeholders

BOEMRE has repeatedlyengaged non-governmental organizations (NGOs) to obtain feedback onits regulatoryframeworkand associated processes. Duringpromulgation ofourrenewable energyregulatory framework rule, we conducted several stakeholderinformation gatheringsessions, as well as workshops on thedraft and final regulations. Sincethe final frameworkwas issued, wehavecontinued meetingwith NGOsand stakeholders, includingTheNature Conservancy, theNational Wildlife Federation, and theMariners AdvisoryCommittee and havehad valuableinformation exchanges. Wehavealso communicated with representatives of fishing interests through thespecial working groups established by Massachusetts and RhodeIsland, as well as the regionalFisheries Management Councils. BOEMRE also hascontinued its dialoguewith industryrepresentatives, primarily through theOffshoreWind Development Coalition. Based onall ofour conversations with stakeholders, wehaveidentified regulatoryrevisions that wewill pursueto bring more clarityandefficiencyto ourprocesses. Ourfirst such revision—designed to simplifytheleasingprocess foroffshorewind in situations wherethereis onlyone qualified and interested developerbyeliminatingaredundant and thereforeunnecessary step — became effective on June 15.

Status ofOCSWindDevelopment

All oftheinitiativesdiscussed to this point arehelpingBOEMRE to identifyareas wheretherearerelativelyfew impediments to offshorewind development and move forward quicklyand efficientlyto promotethe establishment of an offshorerenewable energyindustry.

BOEMRE's efforts havealreadyresulted in significant accomplishments in offshorewind development:

• The Bureau hasissued 4 short-term leases that permit theinstallation ofdata collection facilities to inform planned commercial wind development activities (three offNew Jerseyand one offDelaware). Theseleaseswereissued in 2009 under an interim policyinitiated whiletheOCSrenewableenergyregulatoryframeworkwasbeing developed.
• Interiorissued the firsteverU.S. offshore commercial wind energyleasein October2010 fortheCapeWind EnergyProject in Nantucket Sound off Massachusetts. Shortlythereafter, thelesseesubmitted a construction and operations plan, whichBOEMRE approved on April 18, 2011. Thelesseehopes to begin construction laterthisyear. TheCapeWind EnergyProject proposal contemplates building130 wind turbinegenerators, 3.6 megawatts each, with the maximum capacityto produce about 468 megawatts. The average expected production from thewind facilitycould provideabout 75 percent ofthe electricity demand forCapeCod and theislands ofMartha'sVineyard andNantucket. At average expected production, CapeWind could produce enoughenergytopower morethan 200,000 homes in Massachusetts.
• BOEMRE announced thefirst fourWEAs — offthe coasts ofNew Jersey, Delaware, Maryland, andVirginia—established underSmart from theStart on February9, 2011, in aNoticeofIntent to Preparean Environmental Assessment forMid-AtlanticWind EnergyAreas. Wehavedetermined that thereis no competitiveinterest in leasingtheareamadeavailableoffDelaware and we will completethenoncompetitive leasing process in responsetoNRG BluewaterWind's commercial wind leaserequest. Wehopeto makea final decision on lease issuancebythe end ofthisyear. Bycontrast, wehavedetermined that thereis competitiveinterest offMaryland, and webelievetherewill also becompetitive interest offNew Jerseyand Virginia. BOEMREplans to complete competitive processesforthesethreestates byearly2012. Wewill continueto consult with ourintergovernmental task forces onall oftheseleasingprocesses.
• BOEMRE intends to designateasecond set ofWEAs — potentially including areas offshoreMassachusetts, Rhode Island,New York, and North Carolina — bythe end ofthisyear. Wehave already received numerous expressions ofinterest offthecoast ofMassachusetts, and we will besolicitingnominations and other relevant information in theotherthree areas in thecomingmonths. Wewill continuetoconsult with the intergovernmental task forces in thesestates.
• BOEMRE will consult with the established Maineintergovernmental task force concerningpossible futuredeepwaterwind leasing and development and anticipates establishingnew task forces in Georgia, South Carolina and Hawaiilaterthis year. TheUniversityofMaine's DeepCwind program, funded in part byDOE, is workingon developingnew technologies, includingfloatingwind turbinesforuse in deep waters. BOEMRE will work with Mainein the event that we receive an unsolicited application for a commercial wind lease offshoreMaine. We also have received an application forashort-term lease fordata collection offGeorgiaunder theinterim policy, and are currently processing that application.
• BOEMRE also receiveda request fora right-of-wayfora750-milebackbone transmission line running about 10 miles offshorefrom New York to Virginia. Thedeveloperhas ambitious plans forthis transmission line, believingthatit can link futureAtlanticOCSwind energyinstallations in amannerthat can facilitate efficient interconnection to theonshore electricalgrid. We held initial meetings on the proposed project with members of our New York, New Jersey, Delaware, Maryland, and Virginia Task Forces in early June, andwill continue to consult and coordinatewith our Task Forces and other stakeholders in processingthis request.

H.R. 2170 and H.R. 2173

H.R. 2170, the Cutting Federal Red Tape to Facilitate Renewable Energy Act, and H.R. 2173, the Advancing Offshore Wind Production Act, were introduced only a week ago, and the Department has not had sufficient time to conduct a comprehensive analysis of the bills or their potential effects on BOEMRE's offshore renewable energy program. The Department appreciates the committee's efforts to accelerate the development of renewable energy projects on federal lands and waters. However, these bills make sweeping changes to environmental review of renewable energy projects both onshore and offshore. Since the final regulations for the OCS Renewable Energy Program were announced in 2009, BOEMRE has been working extensively with other federal agencies, Atlantic coastal state Governors, and other stakeholders to seek ways to improve the leasing and permitting process for developing this vital component of our nation's comprehensive energy policy without cutting corners on safety or environmental protection. The Department opposes these bills.

While HR 2170 and HR 2173 limit or exempt NEPA review of offshore renewable energy projects and offshore meteorological site testing and monitoring projects, the projects would not be exempt from consultations mandated by several other laws including the Endangered Species Act (ESA), Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA), National Historic Preservation Act (NHPA), National Marine Sanctuaries Act (NMSA), Marine Mammal Protection Act (MMPA), and Coastal Zone Management Act (CZMA). Depending on the location, government-to-government consultations may also be required with affected tribal governments. The important consultation BOEMRE performs in conformance with these laws is often informed by the NEPA analysis customarily undertaken by BOEMRE, and we are concerned that the elimination or limitation of NEPA analysis contemplated by this legislation would deprive those consultations of valuable information and analyses.

H.R. 2170, the Cutting Federal Red Tape to Facilitate Renewable Energy Act, limits Federal NEPA reviews for all renewable energy projects to the "proposed action" and "no action alternative", eliminating the consideration of alternative locations and other project modifications. By limiting the federal agency to a "Take It or Leave It" option, the bill constrains the federal agency's ability to consider reasonable alternatives to a proposed renewable energy project that could ultimately generate a comparable amount of energy but with less environmental impact. Limiting consideration of a reasonable range of alternatives prevents BOEMRE's ability to work with applicants to explore different technologies, siting, and project plans that would advance responsible renewable energy development.

H.R. 2173, the Advancing Offshore Wind Production Act, would completely eliminate NEPA review and analysis of meteorological site testing and monitoring projects on the OCS. This bill may conflict with section 8(p) of the OCS Lands Act (OCSLA), because it may eliminate the Secretary's ability to consider all impacts of meteorological testing and monitoring projects and to consider environmental impacts of renewable energy projects on the OCS.

Section 8(p) requires BOEMRE to issue a renewable lease, easement or right of way for these types of activities, and to determine if competitive interest exists for such a grant. The bill appears to allow permits for meteorological site testing and monitoring activities while remaining silent on the need for a lease, easement or right of way.

H.R. 2173 also sets up a permitting process – which could be read as an additional step in addition to the leasing process – by describing "permit timeline conditions." This section includes a public and interagency comment period during the permitting process while at the same time establishing a 30 day deadline for the Secretary to act on permit applications – thus inherently constraining opportunities for comment.

BOEMRE's comment and consultation process, currently established as part of the leasing process, is extensive. BOEMRE works closely with federal agencies, such as the U.S. Coast Guard (USCG), the Department of Defense, NOAA, and the Federal Aviation Administration (FAA), during the renewable energy leasing process. These agencies have provided invaluable input, assisting us with the acquisition of useful data and information, resolution of multiple use challenges, and identification of key nongovernmental stakeholders. For example, in deciding what areas to offer for lease, consultation and discussions with the Coast Guard resulted in the Coast Guard withdrawing its objection to a significant portion of an area that it initially had objected to, and allowed a larger area to be included in further considerations for leasing.

Several federal laws mandate BOEMRE consult with other federal agencies and tribes, such as the ESA, MSFCMA, CZMA, MMPA, NMSA, and NHPA. The ESA and MSFCMA consultations are generally completed within time periods greater than 30 days. The NHPA allows up to 30 days for an affected tribe to submit a response to BOEMRE's request to initiate a consultation, and the consultation itself can take much longer. The NHPA also requires consultation with State Historic Preservation Officers. The CZMA allows affected states up to 60 days to respond to a BOEMRE-prepared consistency determination (under Subpart C) and six months to respond to a lessee's consistency certification (under Subparts D and E). The NMSA requires notification with a description and potential impacts of actions that are likely to destroy, cause the loss of, or injure any sanctuary resource no less than 45 days before final approval of the action. Consultation may take an additional 45 days longer, and reasonable and prudent alternatives may be recommended. In addition to these mandated consultations, BOEMRE also consults with the Department of Defense to resolve possible multiple use conflicts; FAA regarding conflicts with air navigation, and USCG regarding conflicts with marine navigation. The time to complete these consultations, as well as any others that may be required, varies depending on a variety of factors, including previous activity in the area and, most importantly, with the complexity and controversy of the many safety, environmental, and operational issues to be addressed.

Finally, since only governmental entities may take part in Task Force meetings, BOEMRE frequently participates in stakeholder outreach efforts with entities such as maritime navigation organizations and commercial fishing groups that may be affected by offshore renewable energy activities. BOEMRE believes that continuing this effort will be crucial in order to avoid or minimize user conflicts and diffuse potential litigation challenges, and that 30 days will likely be insufficient time to meaningfully engage with these groups.

Both bills are inconsistent with sound and long-standing NEPA environmental reviews and with BOEMRE's technical and engineering reviews necessary to promote safe operations and environmental protection for responsible renewable energy activities on the OCS.

Conclusion

BOEMRE has set ambitious but achievablegoals to help the U.S. makedevelopmentofdomesticsources of clean, renewable energyareality. The combination ofstreamlined processes alongwith theincreased involvementofstate and federal partners is helpingBOEMRE makegood strides in reachingthosegoals. BOEMRE is excited to haveaprominent rolein thenation's renewable energyfuture, and looks forward to workingwith stakeholders to developathrivingdomesticoffshorewind industrythat is coordinated and supports ExecutiveOrder13547 and thenational policy forstewardship oftheoceans.

Mr. Chairman this concludes BOEMRE's statement for the record.

[1] A National Offshore Wind Strategy, Creating an Offshore Wind Energy Industry in the
United States, February 7, 2011