[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




 
 H.R. 5156, TO AMEND THE OUTER CONTINENTAL SHELF LANDS ACT TO PROTECT 
     THE ECONOMIC AND LAND USE INTERESTS OF THE FEDERAL GOVERNMENT

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             July 25, 2002

                               __________

                           Serial No. 107-148

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              Anibal Acevedo-Vila, Puerto Rico
Greg Walden, Oregon                  Hilda L. Solis, California
Michael K. Simpson, Idaho            Brad Carson, Oklahoma
Thomas G. Tancredo, Colorado         Betty McCollum, Minnesota
J.D. Hayworth, Arizona               Tim Holden, Pennsylvania
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                      Tim Stewart, Chief of Staff
           Lisa Pittman, Chief Counsel/Deputy Chief of Staff
                Steven T. Petersen, Deputy Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    BARBARA CUBIN, Wyoming, Chairman
              RON KIND, Wisconsin, Ranking Democrat Member

W.J. ``Billy'' Tauzin, Louisiana     Nick J. Rahall II, West Virginia
Mac Thornberry, Texas                Edward J. Markey, Massachusetts
Chris Cannon, Utah                   Solomon P. Ortiz, Texas
Jim Gibbons, Nevada,                 Calvin M. Dooley, California
  Vice Chairman                      Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana


                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 25, 2002....................................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement of....................................     2
    Kind, Hon. Ron, a Representative in Congress from the State 
      of Wisconsin, Prepared statement of........................    12
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts, Prepared statement of..............    13

Statement of Witnesses:
    Burton, Johnnie, Director, Minerals Management Service, U.S. 
      Department of the Interior.................................     7
        Prepared statement of....................................     9
    Steve, Jaime, Legislative Director, American Wind Energy 
      Association................................................    18
        Prepared statement of....................................    19

Additional materials supplied:
    Cape Wind Supporters, List of members submitted for the 
      record.....................................................    40
    Charter, Richard, Marine Conservation Advocate, Environmental 
      Defense, Letter submitted for the record...................     4
    Duffy, Dennis Vice President of Regulatory Affairs, Cape Wind 
      Associates, LLC, Statement submitted for the record........    33
    Genthner, Captain Wayne, Email communication submitted for 
      the record.................................................    36
    National Ocean Industries Association, et al., Letter 
      submitted for the record...................................    37
    Yearley, Douglas, Executive Director, Alliance to Protect 
      Nantucket Sound, Statement submitted for the record........    28


LEGISLATIVE HEARING ON H.R. 5156, "TO AMEND THE OUTER CONTINENTAL SHELF 
LANDS ACT TO PROTECT THE ECONOMIC AND LAND USE INTERESTS OF THE FEDERAL 
   GOVERNMENT IN THE MANAGEMENT OF OUTER CONTINENTAL SHELF LANDS FOR 
  ENERGY-RELATED AND CERTAIN OTHER PURPOSES, AND FOR OTHER PURPOSES."

                              ----------                              


                        Thursday, July 25, 2002

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 2 p.m., in room 
1334, Longworth House Office Building, Hon. Barbara Cubin 
[Chairman of the Subcommittee] presiding.H.R. 5156

   STATEMENT OF THE HON. BARBARA CUBIN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF WYOMING

    Mrs. Cubin. The legislative hearing will come to order. The 
Subcommittee on Energy and Mineral Resources meets today to 
hear testimony on H.R. 5156, legislation on energy-related uses 
of the Outer Continental Shelf.
    This bill addresses issues associated with permitting 
future nontraditional energy and energy-related projects on the 
Outer Continental Shelf (OCS). Such projects would include 
alternative energy projects such as wind, wave, and solar power 
production, as well as ancillary projects to oil and gas 
development on the Shelf, such as emergency medical facilities 
and supply facilities that would support deepwater exploration 
and development projects.
    There is presently no statutory authority to permit such 
projects. Earlier this year, I was contacted by the 
administration about the need for legislation that would 
clarify the permitting process for these innovative projects on 
the OCS. Working with the administration, I have introduced a 
bill that gives the Secretary of the Interior the authority to 
permit and oversee energy-related activities under the OCS 
Lands Act.
    This legislation is needed because no authority currently 
exists to permit alternative energy projects and ancillary 
projects to support oil and gas development on the OCS. 
Clearly, our Nation faces a growing energy supply and demand 
challenge that calls for innovative solutions.
    Two innovative ways that will meet that challenge are 
through increased production and the use of renewable energy 
and through production of oil and gas in deep water. H.R. 5156 
facilitates both of these solutions. The bill clarifies the 
jurisdiction for these projects so that private sector entities 
wanting to develop alternative energy resources offshore will 
know which agencies to approach for permitting. It is crucial 
for the development of any alternative or traditional energy 
project to have certainty in the permitting and regulatory 
process that this bill provides. This bill also ensures that 
future projects on the OCS will be performed in a safe and 
environmentally sensitive manner, and that a proper abandonment 
in the site clearance process will exist for each project.
    H.R. 5156 enables the Department of Interior to inform and 
work with other relevant Federal agencies that will be involved 
in the project permitting process. It is my understanding that 
the legislative language in H.R. 5156 has gone through an 
extensive discussion and approval process amongst all Federal 
agencies that have an interest in the OCS, and the legislative 
language has been agreed to by those agencies and the OMB. This 
bill will not supersede or modify any exiting authority of any 
other agency responsible for permitting or regulating offshore 
energy projects. It is designed to complement existing statutes 
and ensure that all innovative offshore energy projects have a 
clear permitting process.
    The President's National Energy Plan called for the 
simplification of permitting for energy production in an 
environmentally sensitive manner. It also called on the 
Secretaries of Interior and Energy to evaluate access 
limitations to Federal lands in order to increase renewable 
energy production. This legislation helps to address both of 
these goals.
    It is my understanding that offshore wind energy projects 
are now being developed in Northern Europe and numerous 
projects with significant generation capacity are on the 
drawing board. This appears to be sound use of public resources 
for energy production. We need innovative alternative and 
traditional energy solutions in order to meet our future energy 
needs. I believe this bill will facilitate these solutions.
    [The prepared statement of Mrs. Cubin follows:]

  Statement of Hon. Barbara Cubin, Chairman, Subcommittee on Energy & 
                           Mineral Resources

    The Subcommittee on Energy and Mineral Resources meets today to 
hear testimony about H.R. 5156, legislation on energy related uses of 
the Outer Continental Shelf. This bill addresses issues associated with 
permitting future non-traditional energy and energy-related projects on 
the OCS. Such projects would include alternative energy projects--such 
as wind, wave and solar power production--as well as ancillary projects 
to oil and gas development on the Shelf--such as emergency medical 
facilities and supply facilities that would support deepwater 
exploration and development projects.
    There is presently no statutory authority to permit such projects. 
Earlier this year, I was contacted by the Administration about the need 
for legislation that would clarify the permitting process for these 
innovative projects on the OCS. Working with the Administration, I have 
introduced a bill that gives the Secretary of the Interior the 
authority to permit and oversee energy related activities under the OCS 
Lands Act.
    This legislation is needed because no authority currently exists to 
permit alternative energy projects and ancillary projects to support 
oil and gas development on the OCS. Clearly our nation faces a growing 
energy supply and demand challenge that calls for innovative solutions.
    Two innovative ways that we will meet that challenge are through 
increased production and use of renewable energy and through production 
of oil and gas in deep water. H.R. 5156 facilitates both of these 
solutions. The bill clarifies the jurisdiction for these projects so 
that private sector entities, wanting to develop alternative energy 
resources offshore will know which agencies to approach for permitting. 
It is crucial for the development of any alternative or traditional 
energy project to have certainty in the permitting and regulatory 
process. This bill would provide such certainty. It also ensures that 
future projects on the OCS will be performed in a safe and 
environmentally sensitive manner and that a proper abandonment and site 
clearance process will exist for each project.
    H.R. 5156 enables the Department of Interior to inform and work 
with other relevant Federal agencies that will be involved in the 
project permitting process. It is my understanding that the legislative 
language in H.R. 5156 has gone through an extensive discussion and 
approval process amongst all Federal agencies that have an interest in 
the OCS, and that the legislative language has been agreed to by those 
agencies and the OMB. This bill will not supercede or modify any 
existing authority of any other agency responsible for permitting or 
regulating offshore energy projects. It is designed to complement 
existing statutes and ensure that all innovative offshore energy 
projects have a clear permitting process.
    The President's National Energy Plan called for the simplification 
of permitting for energy production in an environmentally-sensitive 
manner. It also called on the Secretaries of the Interior and Energy to 
evaluate access limitations to federal lands in order to increase 
renewable energy production. This legislation helps to address both of 
these goals.
    It is my understanding that offshore wind energy projects are now 
being developed in Northern Europe and numerous projects with 
significant generation capacity are on the drawing board. This appears 
to be sound use of public resources for energy production. We need 
innovative alternative and traditional energy solutions in order to 
meet our future energy needs. I believe this bill will help to 
facilitate these solutions.
                                 ______
                                 
    Mrs. Cubin. I have been asked to submit for the record 
written testimony for Environmental Defense. And since there is 
no one here to object, I so order.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T0970.003
    
    [GRAPHIC] [TIFF OMITTED] T0970.004
    
    [GRAPHIC] [TIFF OMITTED] T0970.005
    
                                ------                                

    Mrs. Cubin. This testimony opposes H.R. 5156. Environmental 
Defense asserts that the purpose of this bill is to enact a 
short-term mechanism--or, excuse me--a shortcut mechanism for 
permitting liquefied natural gas facilities that sidesteps 
environmental review. These assertions, however, are absolutely 
incorrect. In fact, the language in H.R. 5156 excludes 
activities authorized in the Deepwater Ports Act.
    The Port Security Bill, which is currently in conference, 
would amend the Deepwater Ports Act to give the Transportation 
Department jurisdiction over LNG facilities. I understand that 
the administration supports those amendments, but we will 
specifically ask our administration witnesses to testify about 
that.
    So, without further delay, I would like to recognize Panel 
Number One, Ms. Johnnie Burton, the Director of the Minerals 
Management Service of the U.S. Department of Interior, a 
longtime friend and a former colleague in the Wyoming State 
legislature. I can honestly tell you Johnnie Burton is the most 
knowledgeable person I know about mineral development and 
severance taxes, royalties, the whole thing. She was the 
Director of Revenue at the Department in the State of Wyoming. 
And we are very, very blessed to have her as the Director.
    Mrs. Cubin. So, without other delay, the witness is 
recognized to testify.




  STATEMENT OF JOHNNIE BURTON, DIRECTOR, MINERALS MANAGEMENT 
            SERVICE, U.S. DEPARTMENT OF THE INTERIOR

    Ms. Burton. Thank you very much, Madam Chairman. I 
appreciate the opportunity to appear before you today to 
discuss the administration's legislative proposal to facilitate 
energy-related uses on the Outer Continental Shelf (OCS). Madam 
Chairman, I would also like to take this opportunity to thank 
you personally for introducing the administration proposal as 
H.R. 5156. We look forward to working with you and members of 
your Subcommittee and others to begin to consider both the need 
and the merits of this bill.
    The administration strongly supports enactment of H.R. 
5156. We believe that this legislation is both timely and 
necessary, and has the potential to encourage innovative energy 
projects on the OCS. The bill directly supports the President's 
National Energy Policy initiative to simplify permitting for 
energy production in an environmentally sensitive manner, and 
also supports the Secretary of the Interior's goal of 
facilitating renewable energy projects on the OCS. Hopefully, 
my testimony today will help shed some light on several parts 
of the bill and on the goals of the administration, and why the 
Department of the Interior is given the lead role in this 
particular issue.
    Over the past 18 months, we have been approached at the 
Department of the Interior by both the oil and gas industry and 
other segments of the private sector concerning ideas and plans 
for various initiative energy-related projects offshore. In an 
effort to help address the issues raised by the private sector, 
we began to examine the authorities and mechanisms currently in 
place to permit such projects. What we found is that, generally 
speaking, there currently exists no clear authority for the 
Federal Government to comprehensively review, permit, and 
provide appropriate regulatory oversight of those projects, 
with a few exceptions. The exceptions are minerals activity, 
which the Department of the Interior manages and oversees; the 
oil terminals, which are under the Deepwater Ports Act and are 
implemented by the Department of Transportation; and then the 
projects that would be permitted under the Ocean Thermal Energy 
Conversion Act under the Department of Commerce, although there 
are no such projects at this time.
    This means that a diverse array of OCS energy-related 
projects that either are contemplated or may be contemplated in 
the future by the private sector have no clearly defined 
permitting process. Instead, various Federal agencies with 
different responsibilities are responsible for different parts 
of the permitting process. We think that there are drawbacks to 
this. It is fragmented--and this process because it is 
fragmented--cannot ensure that the Federal Government's myriad 
of interests are fully considered. We would like to ensure that 
the land use management interests of the Federal Government are 
well protected.
    The second drawback to the current situation is that the 
private sector, which must make the tough investment decisions 
concerning whether to proceed or not with those energy-related 
projects, is now forced to go to many agencies and to find out 
on their own where they should go, what they should do, and 
hope they don't miss something. That is because down the road 
it could have a negative impact on their project, something 
they didn't plan for, didn't know they had to plan for.
    So, clearly, this situation as it exists today in our mind 
and in the mind of the Secretary of the Interior does not 
encourage innovation in the energy arena. In fact, it might be 
a deterrent.
    H.R. 5156 is designed to rectify those problems. It will 
provide the Secretary of the Interior with the authority to 
grant an easement or right-of-way for various energy-related 
activity on the OCS, and that would include renewable energy 
projects such as wave energy, wind energy, solar energy, 
perhaps even biomass. We are not sure what is going to come out 
there in the future.
    It will also include a project to support the existing 
production and exploration of oil and gas and various minerals 
on the OCS. It will also help us understand how you can convert 
something that is there today and may have to be decommissioned 
because of, let's say, an oil platform. And the fuel becomes 
exhausted. And technically today we have to tell the owner of 
that platform, which is the recordholder of the lease, that he 
has 1 year to get everything out of there. Well, what if 
another use can be found for that platform? We need to have 
somebody have the authority to review the application and 
decide whether or not it makes sense and be able to do it. 
Right now, we can't.
    So we want to protect the public's interest to capture the 
fair value for the use of the Federal OCS by authorizing the 
Secretary to require an appropriate form of payment for use of 
those lands, and this bill would give the Secretary this 
authority.
    It would also grant the Secretary the authority to issue 
easements or rights-of-way, either on a competitive or non-
competitive basis, as appropriately determined by the 
Secretary.
    It will give the Secretary the authority to oversee all 
activities associated with a project through regulation and 
inspection activities to ensure safety, the safety of people, 
the safety of the environment. Right now, there is nothing 
comprehensive on this front.
    It will also grant the Secretary the authority to pursue 
appropriate enforcement actions if they are needed.
    And finally, and maybe very importantly, it will require--
it will give the Secretary the authority to require some kind 
of financial surety, to make sure that when those facilities 
are no longer needed there is money there to decommission them.
    It appears to the administration that there should be a 
regulatory regime that gives the tools for the Department to 
act as a land manager with respect to these projects. So this 
would help ensure that the full array of Federal interests in 
the permitting of offshore energy-related uses can be 
addressed, and also give the private sector certainty. They 
know where to go, they know what to do. There is no question. 
And that would help them make their decisions.
    Another important aspect of the legislation is that one 
Federal agency is given the lead role in administering the 
provisions of the bill. There ought to be one place where 
people can go and get all the answers. Although these answers 
may come from different departments eventually, but you need 
someone to coordinate. The administration determined that this 
new authority contained in H.R. 5156 should be vested in the 
Department of the Interior, since historically that Department 
has been the Federal Government's land manager and is the 
primary agency to oversee energy development on Federal land 
through its various bureaus--BLM onshore and various other 
bureaus. MMS has been doing it for mineral exploration 
offshore. So we have quite a bit of experience in dealing with 
submerged lands.
    It is important to note, however, that while the bill gives 
the Department the lead role in coordinating the permitting of 
energy-related uses on the OCS, it also specifically recognizes 
the important role of other Federal agencies in the permitting 
process. In fact, the bill makes it clear that this legislation 
does not supercede or modify the current authority of any other 
Federal or State agency under existing Federal law. Nothing 
else will change.
    Within the Department of the Interior, as you know, MMS has 
many years of experience in overseeing oil, gas, and mineral 
activities on the OCS. It is this experience that led the task 
force of Federal agencies to the conclusion that the primary 
responsibility for offshore energy-related activities should be 
invested in the Department of the Interior.
    To summarize the experience that we have acquired over the 
years, I would like to tell you some of the areas that it 
covers:
    Environmental expertise. Research which is used to make 
informed decisions with regard to leasing and operations on the 
offshore.
    Engineering expertise. Research regarding emerging offshore 
technologies used to develop oil/gas resources and various 
safety issues associated with those activities.
    Regulatory expertise in overseeing OCS oil and gas 
activities to ensure human safety and environmental protection.
    And, finally, a trained offshore inspection work force. In 
addition to enforcing MMS regulations, this work force today 
conducts offshore inspections both for the Coast Guard and for 
the EPA. We work together with other agencies, but we have the 
expertise. It is resident within the Department of the 
Interior.
    In closing, Madam Chairman, I would again like to thank you 
for your interest in this important legislation. The 
administration firmly believes that this bill will provide 
numerous and immediate benefits, and it has the potential to 
expand both our sources and supplies of energy that will be so 
critical to our Nation in the future.
    The administration feels strongly that we must encourage 
new and innovative technologies to help our Nation meet its 
increasing need for energy. Enactment of this legislation will 
be one important step in getting us ready to support and manage 
the development and the new energy sources that might come up 
on the OCS.
    Madam Chairman, this concludes my oral testimony. However, 
I would be pleased to answer questions you have.
    [The prepared statement of Ms. Burton follows:]

  Statement of Johnnie Burton, Director, Minerals Management Service, 
                    U.S. Department of the Interior

    Madam Chairman, thank you for the opportunity to appear before the 
Subcommittee today to discuss the Administration's legislative proposal 
to help facilitate energy-related uses on the Outer Continental Shelf 
(OCS). The Department is excited about H.R. 5156 and its potential to 
encourage innovative energy projects on the OCS. Furthermore, the 
legislation directly supports the President's National Energy Policy 
initiative to simplify permitting for energy production in an 
environmentally sensitive manner and also supports the Secretary of the 
Interior's goal of facilitating renewable energy projects. We look 
forward to working closely with the Committee as it further considers 
both the need for and merits of this proposal. Hopefully, my testimony 
today will help shed additional light on why the Administration 
submitted a legislative proposal; some highlights of H.R. 5156; and why 
the Department of the Interior is given the lead role in this 
legislative initiative.
    As you are aware, this legislative proposal was officially 
transmitted to Congress on June 20, 2002, and introduced by Chairman 
Cubin, as H.R. 5156. The Bill represents the results of more than six 
months of extensive discussions and collaboration with all Federal 
agencies having permitting responsibilities on the OCS, as well as the 
President's Task Force on Energy Project Streamlining. More important, 
H.R. 5156 was developed in a consensus with our sister agencies and 
reflects the best efforts of the Administration to address the array of 
issues associated with permitting various OCS energy-related projects 
that are not currently covered under existing statutes.
    These projects include renewable energy projects such as wind, wave 
and solar energy. In addition, the oil and gas industry is 
contemplating ancillary projects offshore that would directly support 
OCS oil and gas development, particularly in the deep water areas of 
the OCS. These projects include developing offshore staging facilities, 
emergency medical facilities, and supply facilities. Since there 
currently is no legal authority to permit these types of projects, H.R. 
5156 would give the Secretary of the Interior the authority to permit 
and oversee energy-related activities in the OCS under the OCS Lands 
Act.

Why New Legislative Authority is Needed
    Centralizing the overall responsibility for permitting energy-
related uses under one statute and within one agency will have two 
significant benefits. First, it will clarify the regulatory process 
considerably. When the private sector initiates a specific project, it 
will know where to start the permitting process, and in turn, the 
Department would inform the applicant of other Federal permits that may 
be required. Likewise, the Department will be able to inform other 
relevant Federal agencies of the proposal, thus better facilitating its 
timely review and consideration. This approach has worked well for OCS 
oil and gas activities, in which MMS serves as the one-stop starting 
point for a coordinated review and approval process.
    Second, it will clearly provide one agency within the Federal 
government with the full array of tools needed to comprehensively 
manage non-traditional OCS energy-related uses. In short, it will give 
the Department the ability to act as a ``land manager'' with respect to 
the permitting and oversight of energy-related uses of Federal 
submerged lands.
    In considering the Administration's proposal, a logical question to 
ask is whether legislation is necessary to site and oversee energy-
related uses on the OCS, or can it be handled under existing 
authorities. In fact, we asked ourselves that same question as we began 
to consider how to best address issues associated with the siting of 
such uses. After careful analysis of the mechanisms currently in place 
to handle requests for innovative, non-traditional energy-related 
projects on the Federal offshore lands, it became clear to us that--
with limited exceptions--currently there exists no clear authority 
within the Federal government to comprehensively review, permit, and 
provide appropriate regulatory oversight for such projects. The 
exceptions to this general rule include oil, gas and other mineral 
activities permitted under the OCS Lands Act (43 U.S.C. 1301 et seq., 
Department of the Interior); offshore oil terminals permitted under the 
Deep Water Ports Act (33 U.S.C. 1501 et seq., Department of 
Transportation); and projects permitted under the Ocean Thermal Energy 
Conversion Act (42 U.S.C. 9101 et seq., Department of Commerce).
    This means that the vast majority of OCS alternate energy-related 
projects that are or may be contemplated in the future by the private 
sector have no clearly defined permitting process. There is no single 
agency with an overarching role to coordinate that process. Instead, 
various Federal agencies with different responsibilities are 
responsible for permitting a specific part of a proposed project.
    There are two obvious drawbacks to the current situation. First, 
this fragmented process cannot ensure that the Federal government's 
myriads of interests in such projects are fully considered nor can it 
ensure that its economic and land use interests are adequately 
protected. This obstacle can be best overcome by giving a single 
Federal agency the overall authority to coordinate and permit these 
projects--while acknowledging the important role that other Federal 
agencies play (and will continue to play) with respect to the 
permitting process. The proposed legislation does just this by 
investing in the Department of the Interior the primary regulatory 
responsibility while explicitly noting that the legislation will not 
supercede or modify the current authority of any other Federal or State 
agency under existing Federal law.
    A second drawback to the current situation is that the private 
sector, which must make the tough investment decisions regarding 
whether to proceed with new energy-related projects--is now forced to 
``agency shop'' in an attempt to identify an authority that will allow 
them to move forward on a creative new venture. Otherwise, their only 
alternatives are to wait for clarified authority before proceeding, or 
to proceed--with the possibility that a new statute will establish new 
authority with new restrictions. Clearly, this situation stifles 
innovation in the energy arena and, in fact, acts as a deterrent to 
critical investment decisions associated with offshore energy-related 
projects.
    Already, the oil and gas industry has expressed interest in 
developing offshore projects that support OCS oil and gas operations in 
the Gulf of Mexico, such as offshore staging areas and hospitals, and 
has approached the Department and others to discuss these ideas. 
However, to date, they have not proceeded with such plans due, in part, 
to a lack of clear authority on the Federal level. In another case, the 
private sector is actively pursuing a proposed wind energy project 
offshore Massachusetts. This proposal is being coordinated by the Army 
Corps of Engineers (COE) under its authority under the Rivers and 
Harbors Act since one of the permits the project must receive is a COE 
section 10 permit certifying that it will not be a hazard to 
navigation.
    In sum, due to the absence of clear statutory authority for 
permitting the range of various energy-related uses currently being 
proposed or that may be proposed in the future for areas offshore, the 
Administration is firmly convinced that new legislation is needed in 
order to provide a clear and predictable regulatory regime and to fully 
protect the Federal government's interests in such projects.
Highlights of the Administration's Legislative Proposal
    In general, the Administration's legislative proposal sets up a 
comprehensive framework for permitting energy-related uses on the OCS 
not already covered by existing statutes by amending the OCS Lands 
Act--specifically, it will add a new subsection (p) to section 8 of the 
Act. Placing this authority under the OCS Lands Act, which already 
provides the regulatory framework for OCS oil, gas, and mineral 
activities, will allow the Department to build on many of the 
regulatory provisions already embodied in that Act while still allowing 
us the flexibility to tailor those provisions to more non-traditional 
energy-related uses.
    Specifically, the proposed legislation would grant the Secretary of 
the Interior the authority to--
     Grant an easement or right-of-way for energy-related 
activities on the OCS including renewable energy projects, such as 
wave, wind, or solar projects; projects ancillary to OCS oil and gas 
operations, such as offshore staging areas; and energy or non-energy 
related uses of existing OCS facilities previously permitted under the 
OCS Lands Act;
     Protect the public's interest to capture fair value for 
the use of the Federal OCS by authorizing the Secretary to require an 
appropriate form of payment such as a fee, rental, or other payment for 
use of the seabed;
     Issue the easement or right-of-way on either a 
competitive or non-competitive basis, as appropriate and determined by 
the Secretary;
     Oversee all activities associated with a project through 
regulations and inspection activities to ensure safety and 
environmental protection;
     Pursue appropriate enforcement actions in the event that 
violations occur; and
     Require financial surety to ensure that any facilities 
constructed are properly removed at the end of their economic life.

Rationale for Designating the Department of the Interior as ``Lead'' 
        Permitting Agency
    As the Administration began to actively consider the best approach 
for addressing issues associated with siting energy-related uses on the 
OCS, it became clear early on that the Department of the Interior 
should be given the lead role in the permitting of such projects and 
the proposed legislation reflects that consensus. While there are 
numerous Federal agencies with permitting responsibilities on the OCS, 
historically the Department has been the Federal government's ``land 
manager.'' The Department manages more than 500 million surface acres 
of land, with the MMS managing approximately 1.76 billion acres of 
offshore Federal lands and mineral estate. BLM manages 262 million 
surface acres and more than 700 million subsurface acres of Federal 
mineral estate.
    In this role, the Department has demonstrated unparalleled 
experience in multiple-use land management and routinely makes 
decisions to balance economic activities with the need to protect the 
environment. For this reason, the proposed legislation fits well with 
the Department's core missions.
    Also, the Department is the primary agency in the Federal 
government to oversee development of our Nation's energy 
resources'through BLM (onshore) and MMS (offshore). Since the proposed 
legislation pertains to the permitting and oversight of energy uses on 
offshore Federal lands, it is only logical that any new legislative 
authority that may be enacted remains with the Department already 
entrusted with that overall responsibility.
    Within the Department, MMS has many years of experience in 
overseeing oil, gas and mineral activities on offshore Federal lands. 
This experience covers many areas such as:
     Environmental expertise and research which are used to 
make informed decisions with regard to leasing and operations;
     Engineering expertise and research regarding emerging 
offshore technologies used to develop oil and gas resources and the 
various safety issues associated with these activities;
     Regulatory expertise in overseeing OCS oil and gas 
activities to ensure human safety and environmental protection; and
     A trained offshore inspection workforce that, in addition 
to enforcing MMS regulations, also conducts offshore inspections for 
the Coast Guard and EPA.
     Established working relationships with international 
regulators to coordinate and share information and experience on 
regulation of offshore energy projects to ensure safety of workers and 
protection of the environment.
    In closing, I would again like to thank the Subcommittee for its 
interest in this issue and express our sincere desire to work with you 
on this important legislation. The Administration firmly believes that 
this bill will provide numerous and immediate benefits. First, it will 
provide for the sound management of offshore public lands by ensuring 
that principles of safety, environmental protection, multiple use, fair 
compensation, and conservation of resources are all addressed before a 
project is initiated. It will also provide the private sector, which 
desires to invest in offshore energy-related projects with certainty 
and predictability. Finally, the bill has the potential to help 
increase both our sources and supplies of energy that will be so 
critical to our Nation in the future. We have already seen that 
interest and expect to see more once a statutory framework is in place.
    The Department believes strongly that we must encourage new and 
innovative technologies to help us meet our increasing energy needs 
enactment of this legislation will be one important step in helping us 
meet those needs.
    This concludes my written testimony. However, I would be pleased to 
respond to any questions from Members of the Subcommittee.
                                 ______
                                 
    Mrs. Cubin. Thank you, Director Burton. And, Deborah--is it 
correct--that there are statements that the Minority has that 
now will be ordered to be entered into the record.
    [The prepared statement of Mr. Kind follows:]

Statement of Hon. Ron Kind, a Representative in Congress from the State 
                              of Wisconsin

    I recognize the short-term need to increase environmentally sound, 
domestic fossil fuel production. But in the long term we should be 
focusing on the development of renewable energy sources such as wind, 
solar and biomass. That makes sense for both economic and national 
security reasons: the United States has only 3 percent of the world's 
remaining oil reserves, but consumes nearly 25 percent.
    Constructive ways to boost more domestic alternative energy sources 
so that we can break oil dependency from unstable regions of the world 
should be encouraged.
    Therefore, I was initially heartened by the Administration's 
announcement that they were transmitting legislation, incorporated in 
H.R. 5156, to specify that alternate energy projects may be permitted 
by the Minerals Management Service on the Outer Continental Shelf of 
the United States.
    Unfortunately, while H.R. 5156 would grant this authority to MMS, 
the bill would also expand DOI's authority to permit the siting of 
Liquefied Natural Gas - LNG - terminals, conversion plants and 
pipelines, in the OCS. The prospect of LNG facilities off the 
coastlines of States like California, Florida, New Jersey or North 
Carolina, is controversial in those States to say the least.
    Further, as you may know, the Bush Administration has recently 
published an advance notice of proposed rulemaking under the Coastal 
Zone Management Act that could greatly diminish the authority of 
coastal States to assert that Federal consistency applies to ``far 
offshore'' federal projects affecting their coastal zones.
    Should H.R. 5156, as introduced, become law, and should NOAA 
proceed to complete its ill-advised rulemaking, permitting LNG 
facilities in the OCS would not be subject to the consistency 
provisions of the Coastal Zone Management Act.
    This possibility alone will make it very difficult to gain the 
necessary support from Members representing coastal states, which 
include Great Lakes States, to pass this bill.
    H.R. 5156 will require a good deal more consideration before it 
should be brought to a vote in Subcommittee. I would hope that the 
Subcommittee hold at least one more hearing on this bill so that we may 
hear from representatives of coastal states as well as others with a 
vested interest in the bill. We have a number of other questions and 
concerns about the bill that will be addressed in our questions to the 
witnesses.
    In conclusion, while we appreciate the stated intent to facilitate 
the development of alternative energy projects in the OCS, the bill 
would have to significantly rewritten to limit its scope to that end. 
As it stands, the bill would give MMS the authority to permit just 
about anything on the OCS, and that is unacceptable.
                                 ______
                                 
    [The prepared statement of Mr. Markey follows:]

 Statement of Hon. Edward J. Markey, a Representative in Congress from 
                       the State of Massachusetts

    Thank you, Madam Chairwoman. I appreciate your calling this hearing 
today.
    Proper management of the Outer Continental Shelf is extremely 
important for our country--a country with over 12,000 miles of 
coastline. It is especially important to Massachusetts'' economic 
vitality. Many of our industries--from fishing to shipping to tourism--
depend on the health and management of the outer continental shelf and 
coastal areas. I agree with the chairwoman that the current gaps in 
federal laws need to be filled and that if there are jurisdictional 
issues, they need to be solved as well.
    I am concerned, however, that the legislation before us is too 
broad. If it is passed in its current form, OCS would no longer stand 
for ``Outer Continental Shelf.'' Instead, OCS would stand for ``Open to 
Corporate Sale.'' Just asserting the jurisdiction of the federal 
government, without a sound policy to guide the use of federal lands 
and a commitment to a clear process by which innovative individual 
proposals will be judged will not solve our current problems. That 
clear policy is lacking in H.R. 5156. Specifically, I am concerned that 
there is no explicit protection of the States'' right to consistency 
review as established under the Coastal Zone Management Act. I cannot 
support legislation that does not maintain the rights of states to 
review projects that impact the health and safety of their people and 
economy.
    I am disappointed that this hearing does not include a broader 
spectrum of panelists. I think the National Oceans and Atmospheric 
Administration would have valuable insight to add to this policy 
discussions, in particular comments from the Commission on Oceans 
Policy on this legislation would be greatly appreciated. Recently my 
colleague, Rep. Delahunt, has asked them to comment on this bill, which 
could seriously affect his district, and I hope that their comments 
will be considered before HR 5156 moves forward.
    Furthermore, I would like to hear from other industries about their 
current and future proposals for new ways of using the outer 
continental shelf. What plans does the aquaculture industry have? Or 
the liquefied natural gas industry? We will hear from a portion of the 
renewable industry today but I believe we need to be better informed 
about possible types of projects in order to develop a sound policy 
about how to deal with their use of federal waters.
    The frontier days are over. We can no longer just hand over public 
land for industry to use. We must carefully balance the economic and 
environmental impacts of all energy projects anywhere on federal land 
or water, without usurping the right of States to comment on federal 
projects that impact them.
                                 ______
                                 
    Mrs. Cubin. I want to start out by making a statement. 
Ranking Member Kind has been very active in this Subcommittee 
and has rarely missed a Subcommittee hearing. And also this is 
a very busy time of the year for us. We are trying to get 
through all of the bills that we need to get through before we 
take our August district work period. But I have to--and I 
understand that, and I am sure that Mr. Kind is at some place 
that is very important.
    I want to respond--I want to make an observation, though, 
about the rest of the Committee. I have heard nothing but 
harping about the President's energy plan from the other side, 
that it does nothing to protect the environment, or it doesn't 
do enough to protect the environment, and that renewables, 
renewables, renewables, renewables is the only answer. And I 
have to express my deep disappointment that there is no one on 
the other side here to work with us in bringing forward this 
bill that will enable the development of renewable energy 
sources in the short term as opposed to having to postpone it 
and postpone it and postpone it.
    So it is very disappointing that no one sees fit to be here 
for what they have been denouncing the administration for not 
providing. I can't help but think that there could be a 
political reason that they are not here. I could be wrong, but 
it is the way it appears to me.
    So the first question I want to ask you, Director Burton, 
is would you agree with me that this bill is all about 
protecting the environment?
    Ms. Burton. Absolutely, Madam Chairman. If we don't have 
the comprehensive regulatory regime in place, we have no way to 
see and make sure that all the safeguards are observed, and 
that whatever industry does is designed in such a way that is 
as safe as possible to the marine environment. We have a lot of 
scientists on our staff that do nothing but study marine 
environment and make sure that what is done on the OCS is as 
sensitive as it can be to that environment.
    So this would ensure that there is a thorough, complete 
review of the environmental issues before anything is 
permitted.
    Mrs. Cubin. Recently I had the opportunity to go out on a 
platform, producing platform 100 miles out in the Gulf, and 
then we came back into a 30-mile-out platform that was a 
drilling platform and a production platform. And in both 
places, I asked about the MMS and their enforcement of the 
regulations and how well they regulated, and all of the 
workers--I didn't ask the bosses of the companies, the people 
who were taking us on the tour. I asked the people who were 
working on the platforms, I asked the workmen, the laborers on 
the platform how MMS--how important MMS was. And to a person, 
they said that MMS is very knowledgeable. And they come out and 
they make inspections and they are very picky in their 
inspections, which they consider to be good because it is about 
their safety and about the safety of the environment. So I 
don't think there is anyone that could argue the point that the 
MMS is far and away the most qualified agency to deal with 
environmental issues on the Outer Continental Shelf.
    You did discuss this in your testimony, but would you like 
to expand in any way on how MMS recognized the need for this 
legislative language, and why we are pursuing the legislation?
    Ms. Burton. Certainly, Madam Chairman. You know, one of the 
initiatives of the President's National Energy Policy was to 
find a way to simplify and to streamline the regulatory review 
process for future energy projects. This legislative proposal 
was the offshoot, if you will, of the work that the Department 
of the Interior wants to do to support the President's agenda. 
We viewed this as a way to streamline, to simplify, but also a 
way to make sure that the Federal Government's interests were 
protected and well managed. So that was one of the reasons this 
legislation came to be.
    The other reason was what we heard. And, like you, I went 
offshore after I took this job because I wanted to see what we 
were doing out there and how well our people were working with 
industry to regulate them and to manage what they do.
    I heard some interesting things. Such as, when we are 
drilling in ultra deep water--and as you know, we are drilling 
more and more in ultra deep water, which means 100, 150 miles 
away from shore. For example, if we have an accident, either a 
work-related or medical accident to some of the staff, by the 
time they fly to shore, which may be a 2-hour flight by 
helicopter, plus an ambulance ride, it may be too late to save 
somebody's life. And they were talking to me about the 
possibility of building medical facilities offshore that would 
be just a few miles from various platforms, and they could all 
use it and they would be a few minutes by helicopter ride. I 
thought that was a wonderful idea. But right now, no one has 
authority to permit and regulate such an activity. It is to 
support the oil and gas industry, but it is not directly 
drilling or production, and so the OCSLA does not cover that. 
So that would be helpful.
    Then we have the wind project off Nantucket Sound that 
folks were looking to see how to work. Right now they are 
working with the Corps Of Engineers. But, again, the Corps of 
Engineers is trying to cover a lot of ground it is not used to 
covering, because no one seems to be the point agency.
    So all of these things put together brought the 
administration to the conclusion that they needed to propose 
some scheme that would take care of this regulation and this 
management issue, and that is how this came about.
    Mrs. Cubin. I have had conversations with other Members 
specifically about the wind project that is proposed for the 
Nantucket area. And it was expressed to me that hurricanes come 
along the eastern coast, and that there are times when that 
area is hit by hurricanes. And their concern was that if it was 
not built far enough out--basically, they didn't want it to be 
built at all. But the reason they were opposing it was they 
said if a hurricane comes and one of those wind farms is there 
and the hurricane blows it down, then, you know, people 
wouldn't be safe there on the land.
    And could you respond to that? Like, I am not asking you--
because I think it requires some study--I am not asking for 
your opinion on it. But wouldn't the MMS in their studies have 
to take that into consideration, those sorts of things, before 
they could permit under this bill, before they could permit 
that wind farm to be built?
    Ms. Burton. Absolutely. These are the issues that would 
come up on a case-by-case basis, depending on what the project 
is. We don't have any involvement in that project at this 
point. So you are correct; I can't answer this question 
specifically. But this is what the agency does whenever a 
project comes to the point where they have to ask for permits; 
then we do a very comprehensive review of all the aspects of a 
project, and that would be studied also. I am not sure anybody 
is studying that right now. I am not sure anybody is watching 
this particular issue.
    Mrs. Cubin. You covered in your testimony that MMS has 
approached other agencies about the jurisdictional details of 
permitting alternative energy projects. Have the concerns of 
those agencies been met in this language?
    Ms. Burton. I believe so, Madam Chairman. We worked with 
other agencies for about 6 months and went through--you know, 
we have a collaborative process with a lot of agencies. For 
example, we work very closely with the Coast Guard, we work 
very closely with the EPA, with the Defense Department, with 
the Navy, et cetera. We have taken this language and have 
modified it as we met with all of those agencies, and the end 
result is that we had the support of all of those agencies for 
us to bring this language forward. So everyone has been 
contacted.
    Mrs. Cubin. The submitted testimony from Environmental 
Defense asserts that the primary purpose of this bill is to 
grant MMS unprecedented jurisdiction over LNG terminals. How do 
you respond to that?
    Ms. Burton. Well, unless I am mistaken, Madam Chairman, the 
LNG terminal language is not at all in this bill; it is in the 
Deepwater Port Act and it is under the Department of 
Transportation's jurisdiction at this point. And we are 
perfectly satisfied with that. This bill says very clearly that 
it will not address any activity that is already covered in 
other Federal statutes. So, if LNG is in the transportation 
bill, that is who is going to take care of it, and we won't 
have a thing to do with it.
    Mrs. Cubin. I think that is obvious if one reads the bill, 
but I wanted to have that on the record very, very clearly.
    If this bill should be enacted, how will the jurisdictions, 
requirements, and industry standards be defined for projects 
that are covered by the bill?
    Ms. Burton. At this point, Madam Chairman, it is hard for 
me to answer that question because I don't think one size fits 
all. I think that every project that will come along in new--
particularly renewable energy, so new technologies will have to 
be studied on their own merit. Again, we are used to 
undertaking a very collaborative process in order to arrive at 
all the standards we require for various projects. We will 
continue to do that. So we will consult with an awful lot of 
people before we arrive at setting standards for a particular 
project.
    Mrs. Cubin. Another thing that I think is extremely 
important is the role of the adjacent coastal States addressed 
in this bill. And what role will the States play?
    Ms. Burton. The role of the States is not really addressed 
in this bill per se, because this bill doesn't change any 
existing scheme that exists for States as well as Federal 
statutes today. Nothing is going to abridge or change or modify 
the role of the States. We consult the States now for anything 
of the OCS that may have an impact on their coastal zone. We 
will continue to do that regardless of what the project is. So 
that does not impact them.
    Mrs. Cubin. Another assertion that was made in the 
Environmental Defense testimony is that the purpose of this 
bill is really to derail emergent new renewable energy 
resources through escalating royalties. Would you comment on 
that?
    Ms. Burton. My comment on that is that the bill doesn't 
give us any such authority. We do not contemplate any kind of 
royalty regime at this point. We are concerned with how we 
protect the environment and how we manage the submerged lands 
that are our responsibility. The MMS basically is charged 
within the Department of the Interior to take care of 1.76 
billion acres of land. But in order to take care of that, we 
have to have the tools. Right now we have tools that are 
limited to only mineral production. We need to make sure those 
tools can apply to ancillary types of projects to support that 
production and to renewable energy projects.
    Renewable energy is one of the priorities of this 
Secretary. She has worked diligently with the Department of 
Energy to put together a conference, I believe it was last 
October or November, I am not sure exactly when, I was still in 
Wyoming. It had a very good attendance. And BLM followed 
through in the winter, I think January or February, with 
another conference. The report is going to come out pretty 
shortly, put out by both Secretaries of Energy and Interior, 
addressing renewables. She is very intent on doing anything we 
can to foster renewable energies development. This legislation 
is part of it.
    Mrs. Cubin. Under this legislation, what I am speaking of 
here are rights of way. How would the MMS coordinate with FERC, 
another agency, to provide those rights of way for offshore 
energy development as well as the transmission of the energy 
that is produced?
    Ms. Burton. Well, today, we communicate with FERC quite a 
bit on those issues, and we will continue to do so. And there 
won't be any change there. But we have to remember that MMS is 
only interested in managing the land, and that is the right of 
way, the right of way on that land, not in managing the actual 
transmission of energy.
    Today, for example, we work with FERC on pipelines. We 
worry about the right of way. But they monitor the pipeline, 
and they regulate what is transmitted through those pipelines 
when there is still regulation. We know this is largely 
deregulated today.
    If there are lines that transmit energy, for example 
electricity--it could be another form of energy besides oil and 
gas, obviously; it could be electricity off the wind farm, for 
example--FERC keeps its sole authority over the transmission 
line itself. We would only be involved in the right of way. 
That is all. So that doesn't change. This is already in 
statute. It will be the same.
    Mrs. Cubin. Well, I thank you very much for your 
informative testimony and answers to the questions. We will 
keep the record open for--5 days--10 days for other members to 
submit questions in writing, and would ask that you respond to 
those questions if there are any forthcoming. And I want to 
thank you very much for being here, and I look forward to 
seeing you again.
    Ms. Burton. Thank you very much for your time. And we would 
be more than happy to answer any questions of any member of the 
Committee. Thank you.
    Mrs. Cubin. Thank you.
    Mrs. Cubin. Now I would like to invite the second panel, 
Mr. Jaime Steve, American Wind Energy Association.

 STATEMENT OF JAIME STEVE, LEGISLATIVE DIRECTOR, AMERICAN WIND 
                       ENERGY ASSOCIATION

    Mr. Steve. Thank you, Madam Chairman. My name is Jaime 
Steve, and I am the Legislative Director for the American Wind 
Energy Association based here in Washington D.C. Wind companies 
that I represent include GE Wind Power, FPL Energy, American 
Electric Power, PacifiCorp, Vestas American, Cape Wind, and 
Arcadia Wind Power.
    Increased use of clean, domestic wind energy on both 
private and public lands is a bipartisan issue with broad 
support in the Congress and from the Bush administration. For 
example, in March of this year, Congress extended the wind 
energy production tax credit through the end of 2003. An 
additional extension of this tax credit is contained in H.R. 4, 
the wide-ranging energy policy bill passed by the House earlier 
this year, also passed by the Senate in different form, and 
under consideration in conference committee. This provision was 
also contained in the Bush energy plan.
    Let me give you a little background on wind energy on land 
before I jump over to the offshore. In the early 1980's, wind 
energy development was essentially a one-State business, 
California. That was it. Today, utility-scale wind power 
facilities are in 29 States. All these projects are either on 
private or Federal land. Currently, there are no operating 
offshore wind developments in U.S. waters. This is in contrast 
to Europe, where at least 10 offshore projects are operating in 
shallow waters offshore in waters near Denmark, Sweden, 
England, and the Netherlands. Europe has already moved to 
offshore development because of the scarcity of land. Here in 
the U.S., we have lots of available land particularly in the 
West. There, heavy population, not a lot of open land, that is 
why they moved to offshore.
    The earliest European offshore project was built in 1990, 
and it is off the Swedish coast. These European projects range 
in size from .25 megawatts to as large as 40 megawatts in 
capacity. That is a lot of power. Together these European 
projects total over 90 megawatts of capacity, and the distance 
from shoreline of these projects ranges from about five-eighths 
of a mile to about 6 miles. Near term, there are currently 18 
new offshore projects planned throughout Europe totaling 1,500 
megawatts of energy capacity. Long term, Germany alone is 
looking at 25,000 megawatts of power. That is a significant 
amount of power just for one country.
    While it is somewhat more expensive to develop wind 
offshore, there are some simple reasons for doing so.
    The first reason is to gain access to much higher, more 
sustained winds. Therefore, your wind turbines are operating a 
greater percentage of time and you are producing more power.
    The second reason is that these projects can be located 
closer to population centers, therefore reducing the need to 
transmit power long distances over transmission lines. And that 
raises questions if you lose some of the power the further you 
have to transmit it. And also in some areas of the U.S., we 
don't have the existing transmission capacity to move the power 
from where it is to where it is needed.
    I would like to address two specific issues involving H.R. 
5156 and the ability to develop wind along the Outer 
Continental Shelf.
    No. 1 is what we call transitional issues. The industry 
asks that any rules that may flow from this legislation be 
sensitive to the financial investments and potential--of 
potential offshore projects made prior to enactment of the 
legislation. Specifically, we are concerned that companies now 
working to develop sites offshore Massachusetts, which we spoke 
about just recently, and offshore Long Island as well, are not 
disadvantaged by new rules. Essentially, we feel these projects 
should not be unnecessarily delayed by requiring developers who 
have already put in significant amounts of money, time, and 
effort over the last 2 to 3 years. We don't want those folks to 
have to go back to square No. 1 under a new process and start 
all over again.
    Next is interconnection. And again, I think we were just 
discussing the fact that this is really more of an issue for 
the Federal Energy Regulatory Commission than it is for the 
Department of Interior. But that is important to us as well. We 
are concerned that if a current or future project gains 
approval and begins construction, we want to be sure that there 
is an orderly process to ensure that the project can actually 
connect to the mainland; otherwise, there is no sense in 
building the project in the first place. And that is a concern, 
because those that want to stop a project, if they don't win on 
stopping the project itself, they can then block the 
transmission access. And that is another way to stop a 
development.
    In conclusion, I just want to say that offshore wind may be 
a new concept here in America, but the Europeans have been at 
it for more than 10 years with numerous projects. Expanding 
U.S. wind development into appropriate parts of the Outer 
Continental Shelf will allow environmentally responsible 
development and help our country meet its pressing energy needs 
with a clean, nonpolluting, domestically produced source that 
creates high-tech jobs while also paying significant revenues 
either to individuals; but, if we are offshore, we are assuming 
that there would be some level of revenue paid to the Federal 
Government as well.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Steve follows:]

 Statement of Jaime Steve, Legislative Director, American Wind Energy 
                              Association

    Chairman Cubin and members of the subcommittee, my name is Jaime 
Steve. I am Legislative Director for the American Wind Energy 
Association based here in Washington, D.C. Wind energy companies that I 
represent include GE Wind Power, FPL Energy, Inc., AEP (American 
Electric Power) based in Cincinnati, Ohio, PacifiCorp, Vestas American, 
Cape Wind and Arcadia Windpower.
    Increased use of clean, domestic wind energy on both private and 
public lands is a bipartisan issue with broad support in Congress and 
from the Bush Administration. For example, in March of this year 
Congress extended the wind energy Production Tax Credit (PTC) through 
the end of 2003. This item was contained within the Job Creation and 
Worker Assistance Act of 2002 (H.R. 3090, P.L. 107-104). An additional 
three-year extension of this tax credit is contained in H.R. 4, the 
wide-ranging energy policy bill passed by the House earlier this year 
and currently under consideration in conference. This provision was 
also contained in the Bush-Cheney energy plan.
    The wind tax credit, coupled with more than 80 percent reductions 
in wind power costs since the 1980's has enabled wind to compete almost 
head-to-head with conventional energy sources in regions with good wind 
resources. In 2001 alone, Texas saw more than 900 megawatts (MW) of 
wind power come on line. This translates into more than $1 billion in 
economic activity and roughly the amount of electricity needed to power 
200,000 homes. At the same time, hard-pressed Texas farmers and 
ranchers leasing small portions of their land for wind development are 
gaining annual payments of about $3,000 per windmill, per year, for at 
least twenty years. In addition, these wind developments are 
contributing to the tax base of local governments. The simple point is 
that wind energy is real and it is spurring significant economic 
development in rural America.
    In the early 1980's wind energy development was essentially in only 
one state--California. Today, utility-scale wind power facilities are 
in 29 states. All these projects are on either private or federal land. 
Currently, there are no operating offshore wind developments within 
U.S. waters. This is in contrast to Europe, where at least ten offshore 
projects are operating in shallow waters near Denmark, Sweden, England 
and the Netherlands. Europe has already moved to offshore development 
because of the scarcity of available land.
    The earliest European offshore project was built in 1990 
(Norgersund off the Swedish coast). The European projects range in size 
from 0.25 MW to 40 MW in capacity. Together these European projects 
total over 90 MW. The distance from shoreline ranges from 5/8 of a mile 
to 6 miles. Near term, there are currently 18 new offshore projects 
planned throughout Europe totaling 1,500 MW. Long term, Germany alone 
is planning for 25,000 MW of offshore wind power by the year 2025.
    While it is somewhat more expensive to develop offshore wind, there 
are some simple reasons for doing so. The first reason is to gain 
access to higher, more sustained winds, producing up to 40 percent more 
energy per wind turbine. The second reason it that these projects can 
be located closer to population centers where the power is needed, 
therefore reducing the need to build new long-distance power 
transmission lines to get the power to customers.
    I would like to address two issues specifically involving H.R. 5156 
and the ability to develop wind along the outer continental shelf 
(OCS).

Transitional issues
    The industry asks that any rules that may flow from passage of H.R. 
5156 be sensitive to the financial investments in potential offshore 
projects made prior to enactment of the legislation. Specifically, we 
are concerned that companies now working to develop sites offshore 
Massachusetts and New York's Long Island are not disadvantaged by new 
rules and requirements. Essentially, we feel that these projects should 
not be unnecessarily delayed by requiring developers--who have already 
put in years of preparation--to start all over again under a new 
application process.

Interconnection
    We are also concerned that if a current or future project gains 
approval and begins construction that there be an orderly process to 
ensure the project can connect to electric substations and distribution 
lines on the mainland. Simply stated, there is little point in 
constructing an offshore wind farm if it becomes too expensive or 
difficult to transmit power from the wind turbines to the users on 
land.

Conclusion
    Offshore wind may be a new concept in America, but the Europeans 
have more than ten years of experience with these projects. Expanding 
U.S. wind development into appropriate parts of the outer continental 
shelf will allow environmentally responsible development and help our 
country meet its pressing energy needs with a clean, non-polluting, 
domestically produced resource that creates new high-tech jobs while 
also generating revenue for the federal government. Thank you.
                                 ______
                                 
    Mrs. Cubin. Thank you, Mr. Steve. In your testimony you 
describe the offshore wind farms in Europe. Is offshore wind 
energy beginning to make a significant contribution? Now, you 
said it is 25--.
    Mr. Steve. Twenty-five thousand megawatts is planned for 
Germany.
    Mrs. Cubin. Oh, it is planned. OK. So it is beginning, 
then, to make a major contribution to the electricity needs of 
Europe.
    Mr. Steve. Right. Yeah.
    Mrs. Cubin. Are you hearing of increased interest from 
energy companies about offshore projects in the United States?
    Mr. Steve. Definitely.
    Mrs. Cubin. Other than the Nantucket?
    Mr. Steve. Right now, the only two that are under 
consideration are the one offshore Nantucket Sound and one 
offshore Long Island as well. The Long Island Power Authority 
is looking into this. Part of the problem is, it is kind of a 
practical issue to deal with here. It is very difficult in the 
New York area to get power to Long Island. Again, we come to 
this transmission issue. And if you can develop an offshore 
wind farm, then you don't have to run the power all the way 
through Manhattan or from Connecticut, you know, from other 
areas into Long Island. You can have it right there at Long 
Island, and then you are just running essentially a giant 
extension cord from the wind power facility directly to the 
mainland on Long Island.
    Mrs. Cubin. You made a point that I think is really 
significant. That is how, as energy, as the electrons travel 
through the wire or the fiber or whatever, they diminish.
    Mr. Steve. Right.
    Mrs. Cubin. And so placing them in places like off of Long 
Island and Nantucket would certainly prove to serve electricity 
to a lot of people. And what I am thinking about right now is 
that not-in-my-backyard stuff.
    Mr. Steve. Yes.
    Mrs. Cubin. So what kind of unique challenges have you had, 
or do you know of those kinds of challenges in Europe? And how 
did they deal with those? How did they get more public 
acceptance of that?
    Mr. Steve. I think you are referring to what most people 
call NIMBY. Right? Not In My Backyard. But the best one I have 
heard recently is NOPE, N-O-P-E, which stands for Not On Planet 
Earth.
    Mrs. Cubin. Right.
    Mr. Steve. Don't do it anywhere on Planet Earth.
    Here is one way to deal with that. In Europe--I don't know 
if everyone can see the image up here; I passed out some 
copies. I don't have enough copies for everybody else, for the 
press. But the image here is of a wind farm offshore Denmark. 
And a couple members of the Subcommittee and the full Committee 
were there recently last summer, and I was fortunate enough to 
go there myself, as well.
    But what you see here is about 5 miles off the coast of 
Denmark, of Copenhagen, are these windmills. Most days, you 
can't even see them, No. 1. It is very shallow water, so it is 
not a shipping channel. But interestingly, what the developer 
did in that case was they allowed folks who lived along the 
coastline to actually invest in the project. They received some 
revenue. The objections kind of melted away at that point.
    Mrs. Cubin. Funny how that happens.
    Mr. Steve. Yeah. I mean, there are always going to be some 
folks who--you know, some folks like windmills; there are 
always going to be some folks that don't. What we are finding 
is that most folks do, because it is a clean power source; 
there is no pollution. And one of the great things about wind 
power, which is unlike fossil fuels, is that with wind power or 
other renewables as well, you sign a 20-year contract with the 
utility for the power. What you are paying at the beginning of 
the 20-year contract is the exact same price you are paying at 
the end of the 20-year contract because there is no fuel cost; 
the wind is free. All your costs are up front. And you levelize 
those costs over the 20 years.
    So we can come in at a rate of, say, 5, 6 cents per 
kilowatt hour, whereas natural gas may currently be in the 
range--it may be cheaper than us right now, but I think anybody 
in the room who has--Mr. Inslee--anybody in the room who has an 
electric bill or has a home powered by natural gas saw some 
pretty significant price spikes about a year and a half ago. 
And what wind brings and other renewables bring is this kind of 
price stability.
    Mrs. Cubin. I consider the potential offshore wind farms in 
the United States, Nantucket, the incentive that occurred in 
Europe to share in the revenues. Nantucket might not be quite 
as good a partner in that, since the area that we are talking 
about is--you know, a place where probably the people in the 
top 1 percent of income in the country live there--and so they 
might not have the financial needs to offset having to look at 
what they would consider to be an offensive wind farm. But I 
think we have to keep looking for ways to get the public to buy 
into this. Certainly in my opinion, the fact that it is clean, 
consistent, predictable, renewable, ought to be enough; but 
obviously there are other things that have to be dealt with.
    What other unique challenges are there that offshore wind 
energy producers face?
    Mr. Steve. Producing wind energy offshore is somewhat more 
extensive than doing it on land. Just the process itself, the 
specialized cranes that you need to get these facilities 
placed. And essentially the way this is done is with large 
concrete pads. Again, we are operating in shallow water, so you 
will have a concrete pad which is filled with sand as well, and 
then kind of sinks right into the--below the surface of the 
water. So all these processes create a higher expense, but that 
is balanced out by the fact that you can actually put a larger 
windmill or wind turbine offshore--and we are talking in the 
range of--the biggest ones on land right now would be 
considered 1.5, say, to maybe 2 megawatts. And these get very 
big. I mean, to the tip of the blade, we are talking about 
higher than the Capitol building. That is pretty tall. But you 
can do a 3-megawatt machine offshore, which you couldn't do on 
land. It is kind of difficult. So in addition to that, so the 
cost is going up; however, at the same time, you have, as we 
said before, a much more sustained wind, stronger winds as 
well, so you can actually produce more power out of each 
windmill, meaning you need fewer of them.
    Mrs. Cubin. How important is certainty to the industry in 
permitting other--in permitting and other regulatory issues 
that developers face?
    Mr. Steve. That is very good question. The certainty is 
absolutely vital. A developer needs to know as much as they can 
about the requirements, both environmental and safety as well, 
when they are going into this up front, because it can change 
the whole economics of a project later on. So it is very 
important to know that up front. And it also goes to the 
issue--which I didn't delve into too much. But the wind energy 
tax credit is another issue where we are always looking for 
certainty, because investors want to know, if I put my money 
down today, is that tax credit going to be there to help me out 
a year and a half from now?
    We are already facing it. We just got extended for 2 years, 
and we are already facing another deadline coming up. So we are 
hoping that the energy bill passes and that it contains an 
additional 3-year extension of that provision. Certainty is 
crucial.
    Mrs. Cubin. Just overall in terms of acceptance of the wind 
energy industry in the United States and financial 
capabilities, bonding, just in general, what is the state of 
the wind energy industry in the United States?
    Mr. Steve. I would say we are doing pretty darn well right 
now. What we are seeing is, as I said before, in the early 
1980's, it was in one State and today we are in 29 States, to 
varying degrees. But the best thing that we are seeing is that 
throughout the whole Midwest there is significant development.
    One of the most important things that happened to spur wind 
energy development was when President Bush was Governor of 
Texas, he signed a renewable energy requirement called the 
Renewable Energy Portfolio Standard into law in the State of 
Texas. That, coupled with the existing tax credit, has resulted 
in a significant increase in wind energy development in Texas. 
Last year, Texas alone saw over 900 megawatts--915 megawatts, 
to be exact--of brand-new wind power going in. That is over 1 
billion--with a B--$1 billion of economic investment in the 
State of Texas.
    Mrs. Cubin. Pretty good.
    Mr. Steve. Yeah.
    Mrs. Cubin. Are you working with the Interior Department to 
develop a process to facilitate onshore wind energy projects on 
Federal lands?
    Mr. Steve. Yes. Actually, we have been working very closely 
with the Bureau of Land Management, who--most people come to 
Washington and they criticize the government. I can tell you 
that our developers have been working very closely with folks 
at the Bureau of Land Management who have been terrific to work 
with. And that doesn't mean that they roll over and do what we 
ask them to do; it means that they are looking for what--if we 
do this, what is the practical effect of it? So that folks 
don't have to come back later and change rules because somebody 
did something that doesn't work out in reality.
    It is a very good process. And what we are finding is that 
the give and take of information has resulted--is resulting in 
better rules which will probably be proposed for development on 
Federal lands. And that is, again, something that the Secretary 
put forward, Secretary Norton put forward, and folks in the 
Department are acting on expeditiously.
    Mrs. Cubin. So, other than the obvious issues, like birds 
nesting and the Endangered Species Act and all of those things, 
what sort of regulations are you expecting to have applied to 
the industry in siting?
    Mr. Steve. Specifically, two things. The first one is, you 
want to avoid something that happened. You remember when all 
these Internet Web sites were coming up and people were buying 
up--speculators were buying up the names of Internet Web sites, 
and then they would sell them later on for large amounts of 
money? We don't want the same thing to happen with parcels of 
Federal land, where nobody who has no serious interest in 
developing wind power on Federal land buys up all these sites 
and then sells them at a very high cost to developers. We want 
to pay what is reasonable for them, but we don't essentially 
want to pay ransom.
    So essentially what is happening is that the Bureau of Land 
Management is setting up the process where they say, stage one 
is you pay a fee to actually monitor the winds on the land. You 
don't have the rights to develop on that land yet, but you are 
paying a reasonable fee for that.
    Second, if you decide you want to gain access to those 
lands, you have to pay a fee which is higher, perhaps something 
in the range of $2,000 per parcel per year, and it may be 
higher.
    In addition to that, once a project goes in, the Federal 
Government would gain revenues by not just payments for access 
to the land, but also by essentially getting a cut of the 
production of the energy as well.
    Mrs. Cubin. One last question. What about decommissioning 
these farms? Are you talking about bonding? Do you think that 
will happen? I mean, what is the status on that?
    Mr. Steve. Yeah. I think the Bureau of Land Management for 
on-land development is looking at those kind of issues, the 
bonding issues. Because certainly you don't--you wouldn't want 
a developer to walk away from a property and then leave it 
looking scarred. I mean, one would have to remove the bases or 
whatnot. So that is an important consideration as well.
    But what we usually find in the industry is people don't 
walk away from the property, and they take very good care of 
it. And essentially where you have older machines, what ends up 
happening is people are knocking down the older, smaller 
machines and replacing them with maybe one newer machine where 
there had been 12 existing. So for those that don't like the 
windmills, you are kind of reducing that visual aspect as well.
    Mrs. Cubin. And as Director Burton testified, the 
decommissioning of--or, this bill covers decommissioning of any 
project that might be put out there as well.
    Mr. Steve. Right. And we look forward to the same kind of 
process with the Minerals Management Service that we have been 
going through with BLM, Bureau of Land Management.
    Mrs. Cubin. Well, thank you very much, Mr. Steve. I now 
would like to recognize Mr. Inslee for questioning.
    Mr. Inslee. Thank you very much. I want to show my 
appreciation to the Chairwoman for holding this hearing. I 
really appreciate her leadership and looking into this issue. 
So thank you very much. I look forward to working with you on 
this.
    It is great to see you here, and I am very happy to see 
your continued success and am very excited about moving forward 
on wind throughout the country. And you may have talked about 
some of these--I came in late; my apologies if I missed a 
couple things. But why don't you brag a little bit about what 
is happening in the State of Washington just for a minute?
    Mr. Steve. Certainly.
    Mr. Inslee. Just so everybody will know.
    Mr. Steve. Well, we just had our biggest convention, 
actually, annual convention. Over 2,000 people, believe it or 
not, showed up for a wind convention. Unfortunately, it was in 
Portland, Oregon, but it wasn't in Washington.
    Mr. Inslee. We were close.
    Mr. Steve. What we did do, though, is a lot of folks ended 
up getting on buses and driving to the Columbia River Gorge 
where the largest wind development really in the world is 
taking place along the Columbia River Gorge. And it is referred 
to as the State Line Project. Very profitable not only for wind 
energy developers, but for landowners as well. Landowners are 
getting in the range of 2- to $3,000 of rental payments from 
developers per windmill per year for about 20 years. So a lot 
of folks say--farmers ranchers--they say wait a minute, this is 
a giant 401(k) on my property.
    Mr. Inslee. We need those right now.
    Mr. Steve. Yeah. I did hear somebody last night who said 
401(k)s have turned into 201(k)s. But essentially this is a 
real economic development tool for rural America and it 
provides clean energy as well. There is very little downside, 
except for the few folks who are going to say, hey, I just 
don't like them.
    Mr. Inslee. Tell me your thoughts about the necessity of a 
specific legislative piece such as this bill that brings us 
here today, as opposed to using existing statutory permitting 
systems, existing statutory frame works. Do we need for sure 
another piece to allow this to move forward? And, if so, what 
are the most important aspects of that?
    Mr. Steve. The two folks that are looking to do development 
currently are working under existing law. But as we heard 
earlier from Minerals Management Service, it is hard to jump 
into a new area. Essentially, this is a new animal, offshore 
windmills, and folks haven't looked at this before, so I think 
it is important for the Federal Government to have some kind of 
outline for how they are going to deal with these issues.
    The one thing that we ask that I mentioned in my testimony, 
please don't prejudice the folks who have been working on this 
for 2, 3 years already, so if we have new requirements and 
rules we don't send them back to square one after years and 
many dollars investment. That is our biggest concern.
    Mr. Inslee. There has been some thoughts expressed, or 
concerns, about this legislation, that if we do move forward 
with a separate piece, that we need to flush this out quite a 
bit more in a variety of issues. Privatization of siting I 
think is one issue we need to talk about on a national basis; 
ability of input of local citizens. There are visual issues, of 
course. People want some aspect of concern about fisheries 
issues that probably at least need to be addressed.
    Have you got any thought of how to put that in this 
legislation specifically, or are we that far along yet?
    Mr. Steve. I am not sure we are quite that far along, but 
you put your finger on things that I hope all come up within 
the process with the Minerals Management Service or whichever 
agency ends up gaining authority over this area. I had 
described the situation where we are currently working with the 
Bureau of Land Management and we are finding that to be a very 
good process. And they are not giving us everything we want. We 
didn't expect that. But they are being very reasonable with us 
and they are being sensitive to kind of learn our industry and 
learn our concerns. So I am hoping to see the same thing in 
this other agency. I am confident that we will.
    Mrs. Cubin. Will the gentleman yield? I would like to 
follow that because I agree those are very important issues. I 
would like to have a follow-up question. Do you think that the 
legislation needs to reflect dealing with those issues, or 
should those issues be dealt with better by the MMS or by the 
agency that this legislation would grant jurisdiction to?
    Mr. Steve. If I understand you, are you asking specifically 
about the concern about the transitional issues for existing 
companies or the other issues as well?
    Mrs. Cubin.  No, the issues Mr. Inslee just discussed, 
which all are very legitimate concerns. In your opinion, would 
it be better to address those concerns in the legislation or to 
have those concerns be dealt with by the MMS as they are now in 
the Outer Continental Shelf, and by the BLM as they are now on 
land?
    Mr. Steve. I think my gut reaction would be--I will see 
what the poll of my folks--but my gut reaction is I think we 
are better off going through the process with the Agency so we 
can kind of educate them as to what our concerns are, the same 
way we have been doing with the Bureau of Land Management.
    Mrs. Cubin. Thank you, Mr. Inslee, for yielding. Please 
proceed.
    Mr. Inslee. By the way, this is kind of an editorial 
comment. I just want to tell you how much I appreciate in 
general what your industry is doing. And the reason is, in the 
last year--in fact we were on one research project in this 
regard--I saw such a need for development of this resource 
where we have this huge drought in the West that is associated 
or could be associated with global warming. We have tundra 
melting in the Arctic. We have research showing that the 
glaciers are retreating in Alaska twice as fast as anybody 
thought. The glaciers in Glacier National Park may be gone in 
100 to 150 years.
    We have a real global warming issue, and I just want to 
thank you for the leadership your industry is showing in 
finding one piece of the puzzle in how to do that. I want to 
give you encouragement in this regard, and that is why I think 
this is important legislation to deal with.
    Just one last question. As far as new breakthroughs in 
technology in your industry, what are we looking at? 
Incremental changes? Is there another plateau to hit?
    Mr. Steve. There is definitely another plateau. What we 
have seen is the cost of wind power come down by almost 90 
percent since the early 1980's, to the point where at one point 
it was about 45 cents a unit of energy a kilowatt hour. Now we 
are in the range, with the production tax credit of, say, 5 to 
6 cents per kilowatt hour, even less at the better wind sites. 
So what we are constantly doing is we are constantly trying to 
bring down the cost of that power even further, working with 
the Department of Energy to do that. So that is why research 
and development dollars are really important.
    The one most important thing we are working on with the 
Department of Energy is this concept of a lower-speed wind 
turbine. Sounds kind of wonky, but the idea is if you can put 
windmills or wind turbines in areas that aren't the highest 
wind speed areas, what you can do is you can certainly get to 
other parts of the country and you can get closer to where the 
power is needed.
    Right now, for example, the States of North Dakota and 
South Dakota, tremendous potential to produce wind energy, 
tremendous potential. North Dakota--the top 20 States for wind 
power potential, North Dakota is number 1, Texas is number 2, 
South Dakota number 3. Why is it happening in Texas and not 
North Dakota and South Dakota? Because of what President Bush 
did as Governor with the renewable portfolio standard in the 
State that really busted open the market in Texas, plus the tax 
credit. North Dakota and South Dakota don't have the 
transmission capability to move the power where it is, or where 
it can be generated, to where it is needed. If you can do a 
lower wind speed turbine, you can get into other areas that are 
closer to what they call "load centers" or essentially where 
the power is needed--  .
    Mr. Inslee. Is it the transmission cost or just the lack of 
previously developed transmission capacity?
    Mr. Steve. Lack of transmission capacity. And that is a 
problem not just for wind, but for all generation--coal, 
nuclear, demand keeps growing.
    Mr. Inslee. Where are we in potential big wind development 
in the Dakotas where the big new distribution system coupled 
with it? Is anybody really thinking in those terms or not.
    Mr. Steve. There are a lot of folks thinking about it and 
starting to work on it now, but this is not something that is 
going to have a 6- or 12-month fix. This is going to be a 
multiyear fix because it affects everybody. And talk about "not 
in my back yard," people like windmills a heck of a lot more 
then they like giant transmission lines. So there is other 
technology involved there. 3M is experimenting with--they have 
a product actually which is a higher-tech transmission line. 
Essentially you can get more water through the hose so you can 
restring existing lines, but this is not in wide use today. So 
it is a partial fix, but you still have to do more building of 
lines as well. It is a long-term problem but a lot of folks are 
working on it.
    Mr. Inslee. Thank you very much. Thank you, Madam Chair.
    Mrs. Cubin.  Thank you. Another thing I think is really 
essential that we are going to need to do as leaders is figure 
out how we can convince one another and our constituents to 
limit consumption as well, because as we face all of these 
problems like, you know, we are talking about not in my back 
yard, transmission lines, turbines and whatnot, our consumption 
is excessive as well. So that is another part of the 
educational process we have to take.
    Mr. Steve, thank you for your testimony and answers to your 
questions. And thank you, Mr. Inslee, for being here. Before 
you arrived, I expressed my disappointment that no one from 
your side was here. So I appreciate your participation.
    So, since there is no more business in front of the 
Subcommittee, the Subcommittee on Energy and Minerals is 
adjourned.
    [Whereupon, at 3:10 p.m., the Subcommittee was adjourned.]
    [Additional statements submitted for the record follow:]

   Statement of Douglas Yearley, Executive Director on Behalf of The 
                  Alliance to Protect Nantucket Sound

    Ms. Chairwoman.
    Thank you for the opportunity to submit these comments on H.R. 
5156. I am Douglas Yearley, Executive Director of the Alliance to 
Protect Nantucket Sound, a recently-formed coalition with the objective 
of protecting the important environmental, scenic, cultural and 
economic values of Nantucket Sound. The Sound includes offshore areas 
owned both by the Commonwealth of Massachusetts and the federal 
government. The Alliance is composed of a diverse mix of business, 
local government, fishing, environmental and other interests, with the 
common purpose of ensuring that development does not occur in the Sound 
that would destroy the unique values and natural beauty of this 
national treasure. Indeed, the Sound is a designated ``marine protected 
area'' under Massachusetts law and the Executive Order issued by 
President Clinton, and subsequently endorsed by President Bush.

The Cape Wind Project
    While the interests of the Alliance are long-term and broad-based, 
an immediate threat has galvanized our organization. Specifically, this 
is the Cape Wind Project, which proposes to construct what would be the 
largest wind energy plant in the world in the middle of the Nantucket 
Sound. It is important for this Committee to have a sense of the scale 
of this project and how serious its impacts will be. Cape Wind's 
industrial facility would consume 28 square miles of the outer 
continental shelf (OCS) in Nantucket Sound. The project would include 
170 wind towers, each of which would be 425 feet tall. We believe this 
project has significant potential to cause serious damage to the most 
basic values of the Sound. This includes adverse affects on endangered 
species, migrating birds, marine mammals, and commercially valuable 
fish; creates threats to navigation and air traffic, including national 
security flights; threatens significant declines in property values, 
tourism, and tax revenue; and harms recreational activities and scenic 
values. All of these adverse impacts would be caused by a project for 
which there is no clear energy demand in the region, and for which a 
variety of public subsides would be required.
    While the Alliance, and the diverse interests and individuals who 
support it, share the public policy goal of increasing alternative and 
renewable energy as a part of our total energy supply, this general 
goal simply does not offset or justify the negative impacts of a 
project on this scale and in this location. Nor, as I shall explain, 
does it in any way legitimize the rush to develop this site, without 
adequate consideration of other, more suitable locations, and in the 
absence of any federal law providing the authority even to build the 
project.
    This proposed project intersects with H.R. 5156 in the following 
way. The Administration and the Chairwoman of this subcommittee have 
correctly recognized that no legal authority exists to convey the 
federal property rights which are mandatory to allow this project to be 
developed. Equally important is the complete lack of a comprehensive 
federal program to articulate standards for decision making, to set 
environmental rules, to impose rent, or even to designate a lead 
agency. In the meantime, in addition to Cape Wind, other wind energy 
projects are being proposed in this region. Thus, the need for 
Congressional guidance is clear.
    Despite this absence of legal authority, Cape Wind is proceeding to 
move the project forward with the assistance of one federal agency in 
particular, the Army Corps of Engineers (COE). Cape Wind intends to 
build this huge energy project in an offshore area owned by the federal 
government simply on the basis of two permits under Section 10 of the 
Rivers and Harbors Act, which has the important but narrow role of 
permitting potential obstructions to navigation. One permit application 
is for a single scientific data gathering tower, and a second permit 
application, believe it or not, is for the entire 170-tower wind energy 
project.
    Remarkably, even with the admitted knowledge that no federal 
authority exists to build the project on the federal OCS, and that a 
Section 10 permit conveys no property rights whatsoever, the COE has 
moved expeditiously to process the permits, including undertaking the 
preparation of a major environmental impact statement under NEPA for 
the 170-tower project. The COE explanation, conveyed directly to me and 
other Alliance representatives is, to paraphrase - ``We get a permit 
application; we process it.'' Such a single-minded approach by the COE 
ignores the larger and more difficult issues that are presented by the 
lack of legal authority, or the existence of any federal program, for 
such a huge energy project in our valuable offshore waters. While the 
COE has expressed its own doubts about processing the permits (at the 
recent hearings of the U.S. Commission on Ocean Policy), and makes 
clear that no property rights whatever are conveyed in a Section 10 
permit, it nonetheless overcame its institutional misgivings, and 
undertook a full EIS process for 170 wind towers, despite the fact that 
the federal government has no authority for this project.

The Need for a Comprehensive Program and a Moratorium
    Those larger questions of law and policy have now been framed even 
more vividly by the appearance of numerous additional wind energy 
projects that are proposed for the OCS off the southwest coast of 
Nantucket Island. If the COE follows its narrow ``receive a permit; 
process a permit'' approach for one or more additional projects, which 
cannot be built under present law, it will have contributed to the 
creation of an ``open to entry'' approach to the use of federal 
offshore resources for energy development. And it will have done so 
without adequate review, without meaningful standards, and without 
revenue return to the federal government.
    Such an applicant-driven program, called an ``over-the-counter'' 
program in some states, puts the federal government, the adjacent 
state, and all affected interests, including local and regional 
regulatory bodies already strapped for resources, in the position of 
always responding to the initiative and pressures of a project sponsor, 
one at a time. Such sponsors relentlessly press for quick decisions on 
a specific location of their choice which, as in the case of Nantucket 
Sound, may not be an appropriate place to develop such a project at 
all. This ``open-to-entry'' pressure is just what is happening with 
Cape Wind. Such project-driven programs to commit public land or other 
resources to private development may work for selected, unique, and 
smaller projects, like a single offshore platform for a support 
function, or a right of way for an underwater transmission line. 
Congress has recognized previously, however, that such a ``permit on 
demand'' approach does not work for larger nationwide programs like 
geothermal or oil and gas, which require vast tracts, in different 
regions, and which, because of the presence of rich resources in 
certain locations, should involve competition for a site. Clearly, the 
permit by permit approach is the wrong one for the large-scale wind 
energy projects which are proliferating. A comprehensive federal 
program is essential, rather than an open to entry land rush.
    A comprehensive program for developing federal resources or for 
using federal offshore tracts is proactive, positive, and best protects 
the public interest. A good program should, among other purposes, 
encourage wise and needed energy development, guarantee a fair return 
for the taxpayers, set uniform standards for environmental protection, 
and provide extensive state, local and public participation in the 
process. Moreover, because of the importance of these public policy 
objectives, there is a real need to put a hold on all such development 
until a comprehensive program is enacted. If this is not done, 
important resources, such as Nantucket Sound, could be sacrificed.
    We recognize and appreciate that H.R. 5156 addresses the reality 
that no authorization now exists under which any federal agency may 
grant and condition legal rights to develop resources on the OCS, other 
than those already authorized under the Outer Continental Shelf Lands 
Act (OCSLA). The new offshore uses which are being proposed are 
currently without federal legal authorization, despite their extensive 
and significant impacts, and the value of the taxpayer owned resources 
they will use. These unauthorized uses include not only the wind energy 
projects I described, but also the construction of platforms and 
transmission systems for liquid natural gas (LNG) gasification 
projects, electric transmission lines, pipelines and cables, oil 
storage platforms, and other offshore industrial facilities. Without a 
doubt, such intensive uses of the federal OCS call for a comprehensive 
and thoughtful program. Specifically, there should be a leasing program 
for certain uses, for which the best general model available in our 
current system of laws is the OCSLA itself.

H.R. 5156 and the OCSLA Model
    For these reasons, the Alliance applauds the intent of H.R. 5156 to 
provide much needed authority for new energy-related uses of the 
federal OCS. The Alliance cannot, however, support passage of the bill 
unless it is substantially amended to provide for the sort of overall 
program and standards that are included in the OCSLA and its 
legislative history. The OSCLA is a law that has evolved since 1953 to 
provide a balanced federal program intended to encourage the 
development of federal oil and gas, and mineral resources on the OCS. 
Because of the OCSLA, this development has proceeded on terms that 
ensure the balanced protection of the public interest, affected local 
governments, and the significant participation of states, which, after 
all, are the owners of offshore land up to three miles from shore. As 
introduced, H.R. 5156 amends only Section 8 (43 U.S.C. Sec. 1337) of 
the Outer Continental Shelf Lands Act. Beyond this, H.R. 5156 makes no 
reference to the OCSLA, almost as if the application of the OCSLA 
principles is being avoided. To the contrary, H.R. 5156 would be a 
significantly more credible bill if it included many OCSLA provisions.
    Respect for the role of states runs throughout OCSLA, and other 
laws regulating the use of outer continental shelf, such as the Coastal 
Zone Management Act. Federal laws for offshore and marine resources 
reflect this respect by recognizing that the three mile limit of state 
ownership must be regarded with flexibility so that states, localities 
and federal agencies can work together to provide the best management 
of the resources.
    While H.R. 5156 is well intended in its creation of authority for 
the Secretary of Interior, the problem is that, because of the 
generality of the delegation of authority in the bill as introduced, 
the Secretary is given too little guidance as to the details of the 
program to be created. In addition, H.R. 5156 fails to give a proper 
role to agencies with responsibility over marine resources, such as the 
National Oceanic and Atmospheric Administration.
    The following specific areas must be addressed if H.R. 5156 is to 
provide a credible foundation for new offshore energy development, as 
it appears intended to do.

Recommendations
    Although this testimony does not include specific language for 
amendments to H.R. 5156, the following points should be covered by 
amendments if the legislation is to provide a level of authority, 
guidance and protection of the public interest, similar to the OCSLA.
    First, it is essential that any new authorization, such as H.R. 
5156, that would allow a broad range of new, energy uses on the OCS, is 
based, at least in large part, on a programmatic approach relying on 
leases, rather than a permit-to-permit, ``open-to-entry'' approach to 
the commitment of federal property interests for project development. 
Where 28 square miles, or more, of the OCS is committed to intensive 
permanent energy development, the federal government should not be 
permitting one project at a time. Rather, it must develop a serious and 
comprehensive program that applies to all projects.
    Descriptions of such a program are scattered throughout the OCSLA 
and other federal laws, but the central description of the OCS program 
is in 43 U.S.C. Sec. 1344. Section 1344 directs the Secretary to 
prepare, periodically revise, and maintain a leasing program for 
offshore oil and gas, and minerals that implements the policies set out 
in the Act. The program is specified to be conducted in a manner that 
considers economic, social and environmental values of both renewable 
and non-renewable resources contained in the OCS, as well as the 
potential impact of oil and gas exploration on other resource values 
including the marine, coastal and human environments. The program is 
based on a broad range of existing information regarding developmental 
benefits and environmental risks among regions of the country, so that 
the risks and benefits may be equitably shared. The program must also 
fully consider other uses of the sea and seabed, including 
conservation, fisheries, and navigation.
    Such a programmatic approach can give full and fair attention to 
corporate project sponsors by comprehensively studying various areas 
for the significance of their resources, including wind resources, and 
seeking nominations for those areas that are most favored by industry. 
It also should allow for certain areas to be excluded, where for a 
variety of reasons, development would not be appropriate. Any 
nominations can be balanced against other factors that would include 
competing resource and economic values in the area, the nature of 
federal or state protection of the marine resources in the area, the 
opinions of the adjacent state and local governments, and other 
factors. Such a process is intended ultimately to make available for 
development those areas which have high potential for energy 
production, but which present few conflicts for enabling the 
development to occur. This is exactly the sort of program that has 
evolved with respect to offshore oil and gas development. It is also 
the sort of program that led to the decision not to lease and develop 
some areas off of Alaska, Florida, California and New England, despite 
the industry's belief, that promising resources were there. It is 
essential that a similar program be instituted for the new offshore 
energy uses authorized by H.R. 5156.
    Second, this program should not be vested exclusively in the 
Department of the Interior. These projects will dramatically affect 
marine resources, and joint authority should be shared with the 
Department of Commerce through NOAA.
    Third, such a program must have respect for, and provide for the 
substantive involvement of states, local governments and the public, in 
each area for which new offshore energy development is proposed. Among 
other provisions, 43 U.S.C. Sec. 1344 and Sec. 1345 set out important 
standards directing that the federal program be fully cooperative with 
adjacent states. These provisions include not only coastal zone 
management planning, but also involve the states in the federal 
offshore development planning process. They establish the right of 
states to submit recommendations to the Secretary regarding the size, 
timing or location of a proposed project or lease sale. The Act also 
permits a state to recommend areas that should not be eligible for 
leasing. In essence, much of the success of the offshore oil and gas 
leasing program is due to the fact that the consultative process 
eliminates areas where state-federal conflict is likely to forestall 
development, even if leases are issued. H.R. 5156, in contrast, 
provides only general direction for state consultation and fails to 
detail a role for states, local governments or the public.
    The legislation also must authorize an ongoing program of 
environmental studies to identify areas where alternative energy 
resources, like wind, are greatest. The studies must also assess the 
environmental effects of developing those resources. Such a program, as 
directed in 43 U.S.C. Sec. 1346, has been established and maintained 
for many years with respect to offshore oil and gas. The same type of 
program, specifically modified to address alternative energy 
development, could serve as a basis for an alternative energy 
environmental studies program. The goal is a successful long-term 
approach to alternative energy development, not a rush to get the first 
project expedited on any terms.
    Fourth, a fair return for taxpayers is addressed only in the most 
general terms in H.R. 5156. The bill, as introduced, directs the 
Secretary only to establish ``reasonable forms of annual or one-time 
payments for any easement or right-of-way granted.'' It also authorizes 
negotiated arrangements with the party to whom the easement or right-
of-way is granted. The one-time payment and negotiated arrangement 
approach is typical of right-of-way and easement grants, for single 
facilities or for very defined and limited land-uses. Such a one-time 
fee payment approach is, however, totally unsatisfactory for large 
projects that consume a great deal of land or resources, and for which 
the taxpayers deserve a market value return and a marketplace approach. 
In contrast, under the OCSLA, federal leases are sold competitively to 
the highest bidder, an approach which is made possible by the fact that 
leasing of tracts occurs only after a plan has been developed that 
identifies high priority areas in which more than one bidder will be 
interested. This is far preferable to a ``first come, first served, 
let's make a deal'' approach. 43 U.S.C. Sec. 1337. A fair return for 
taxpayers can be accomplished for alternative energy development, but 
not under the open-to-entry approach that H.R. 5156 presents. At the 
very minimum, H.R. 5156, or any bill intending to provide authorization 
for new energy-related uses of the OCS, should direct that competitive 
bidding be treated as a preferred approach to be used, unless there is 
justification not to do so. High resource value areas, either for 
industrial wind projects or pipeline rights of way, should be 
competitive where possible. Otherwise, public resources will be 
negotiated away, and sold for single payments at levels that do not 
return to the taxpayers the fair market value of the valuable resource 
rights that are conferred. The development of alternative or renewable 
energy resources is a good objective, but not at any price, 
particularly considering the other subsidies that are provided.
    Neither Cape Wind, nor other alternative energy proposals, are 
``public service projects'' undertaken by non-profit organizations. The 
project may provide cleaner electric generation, but the projects are 
private, for-profit enterprises by corporations; they create other 
environmental impacts, and they are based on the use of taxpayer-owned 
resources, just like oil and gas. This is precisely what is happening 
now in Nantucket Sound and is another reason that an immediate 
moratorium must be imposed on the permit speculators until authority 
and standards are established by Congress.
    Fifth, H.R. 5156 fails to provide for specific environmental 
standards. As the Cape Wind Project demonstrates, these projects have 
the potential to be very damaging to the environment. Any authorization 
for such a program must establish detailed standards for environmental 
review, including prohibitions on locating any such project in areas 
designated as sanctuaries or protected zones under state or federal 
law.
    Other issues that must be resolved in any bill establishing new 
authority for alternative energy uses for the OCS include the 
following:
     The authorization should contain provisions, such as 
those in 43 U.S.C. Sec. 1347, providing for safety and health 
regulations including the use of best available and safest economically 
feasible technologies. No such provision exists in H.R. 5156, in spite 
of the potential for such problems in LNG operations, oil storage and 
even wind energy facilities.
     The authorization should incorporate 43 U.S.C. Sec. 1349, 
to provide rules for citizen suits challenging program decisions and 
dealing with significant jurisdictional issues. No such provision 
exists in H.R. 5156.
     The issue of separating leasing and development 
decisions, as OCSLA does with respect to OCS oil and gas, should be 
fully considered and applied where appropriate. H.R. 5156 contains no 
such provisions, and in the limited hearings afforded to this 
legislation, there was no way in which this option could be explored. 
The point is that the separation of leasing and development into two 
phases makes sense in certain situations, and it affords states an 
added opportunity to review the specific plans for development before 
it proceeds.
    There are numerous other features of the OCSLA that would be 
desirable for inclusion in a bill authorizing alternative energy uses 
on the OCS. These features include the requirement of annual program 
reports, as well as regular reports on human and budgetary resources 
needed to carry out a credible program that will make a contribution to 
the nation's energy supply, while protecting the environment and other 
significant interests.
    Perhaps no element of the OCSLA demonstrates the differences 
between the approach of H.R. 5156, and the approach taken by the 
Congress for the offshore oil and gas program than does 43 U.S.C. 
Sec. 1332. This section is an impressive declaration of policy by the 
Congress with regard to petroleum and mineral development on the 
federal OCS, and confirms that it will occur only in balance with other 
significant interests, including environmental protection and state and 
local government involvement. It is unclear why H.R. 5156 did not 
incorporate such a declaration of policy or reference Section 1332 at 
all.

Comments on Other Testimony
    In addition to the points made above supporting comprehensive 
legislation to authorize the new alternative energy uses proposed on 
the OCS, it is also necessary that we comment on some elements of the 
testimony given on behalf of the American Wind Energy Association.
    First, this testimony asks that any rules that may flow from 
passage of H.R. 5156 ``be sensitive'' to the financial investments in 
potential offshore projects made prior to enactment of the legislation. 
The Association is concerned, as it said, about projects that have 
already begun being ``disadvantaged by new rules and requirements'' or 
``unnecessarily delayed'' by whatever system Congress ultimately 
chooses to put in place to manage these new uses of the outer 
continental shelf.
    This position essentially stands reason on its head. It asks that 
the speculative corporate developers who proceeded to invest in and 
force consideration of projects, in a legal setting that clearly does 
not provide authority for such projects, should actually be rewarded 
for the attempt. Just the opposite is called for; not only should such 
``transitional relief'' not be granted to those who were presumptuous 
enough to assume that they could begin these developments without legal 
authorization, but a moratorium should be placed on all federal 
agencies from processing such permits to avoid creating even a 
suggestion of such grandfathered rights to proceed free of the 
constraints of a new program.
    Similarly, in a short section entitled ``Interconnection,'' the 
Association expresses its concern that if a current or future project 
gains approval and begins construction, that there be an ``orderly 
process'' to ensure the project can connect to electric substations and 
distribution lines on the mainland. While no one can oppose an 
``orderly process,'' and we do not, our concern is that this is 
``code'' for the preemption of legitimate state and local rights with 
respect to rights-of-way across state offshore lands or local planning, 
zoning and utility location requirements. This would amount to an 
extraordinary breach of the federalism concepts so long championed by 
this Committee.
    Essentially, what the Association appears to have in mind here is a 
totally federalized program for alternative energy projects that 
preempts legitimate state and local prerogatives. That kind of federal 
overreaching should not be tolerated by this Congress. In essence, any 
bill that is passed to establish a new program for granting and 
conditioning rights for alternative energy development on the OCS 
should be fully applicable to all proposals, whether underway or not, 
and should be deeply respectful of the prerogatives of state and local 
governments, avoiding federal preemption in all cases. Those who invest 
prior to the existence of such authority should do so at their own 
risk.

Conclusion
    The Alliance to Protect Nantucket Sound recognizes, as do the 
sponsors of H.R. 5156, that no authority currently exists for the 
federal government to grant property rights for the OCS to develop 
alternative energy, or for other energy activities, which are not 
already authorized by the OCSLA. We have already learned from the 
emerging wind energy project proposals that these developments can be 
of immense scale and impact. Fully recognizing the general and long-
term value of alternative or renewable energy, offshore projects of 
this type must be undertaken. But they will be most successful if done 
through a comprehensive program incorporating virtually all of the 
elements that are already delineated in the OCSLA. This is the 
approach, not the ``give me my project now,'' approach, that will truly 
get renewable energy institutionalized over the long-term.
    If the motivation for introducing H.R. 5156 at this late point in 
the 107th Congress is simply to get the issue on the table and to pave 
the way in the next Congress for the comprehensive committee 
consideration which is necessary to enact such authority, then we 
applaud the sponsors for their foresight. However, if the intent is to 
ask this Congress to pass hastily a very general authorization that 
allows these new uses of the OCS to occur without any of the safeguards 
and process that are applied to federal oil and gas leasing and 
development, we think every coastal state, local government, business 
or interest group should be concerned. The Alliance clearly opposes 
such an approach. All who care about the manner in which the offshore 
areas of our country are developed should oppose this legislation until 
it is amended to cover the points that are outlined in this testimony. 
The Alliance will work constructively with the Congress to achieve 
legislation that provides for the development of new offshore energy 
resources in balance with all of the other factors which are involved. 
We trust that such a program, properly administered, is more likely 
than not, to determine that a site such as Nantucket Sound should never 
be chosen for a project like Cape Wind. The outcome on this 
authorization raises issues which go well beyond one project and one 
location. Thank you again for this opportunity to submit comments.
                                 ______
                                 

Statement of Dennis J. Duffy, Vice President, Regulatory Affairs, Cape 
                          Wind Associates, LLC

1. Introduction of Cape Wind.
    Cape Wind Associates is developing the nation's first offshore wind 
farm, which will be located in waters subject to Federal jurisdiction 
some five miles off the coast of Massachusetts. It will be capable of 
generating 420 mw of clean and renewable energy. The Cape Wind project 
has been under development at considerable effort and expense, and the 
applicable permit application under existing Federal law was filed with 
the Army Corps of Engineers (ACE) last fall. A protocol for coordinated 
review of the Project by Federal and State agencies has been agreed 
upon and a comprehensive joint review process is now well underway. The 
project has received strong support from the region's leading 
environmental and ratepayer advocates (including MASSPIRG, Greenpeace, 
Union of Concerned Scientists, Cape Clean Air, the Massachusetts Energy 
Consumers Alliance and the Massachusetts Climate Action Network), as 
well as endorsements from the editorial pages of The Boston Globe, The 
Boston Herald, and The Providence Journal. (More comprehensive project 
information is available on our website at www.capewind.org.) As other 
commentators on H.R. 5156 have noted, offshore wind energy represents a 
tremendous potential for enhancing the Nation's supply of clean and 
renewable energy, and we welcome any initiative to streamline and 
expedite the necessary approval process.

2. General Comments on H.R. 5156.
    We very much appreciate the initiative of the Minerals Management 
Services in sponsoring legislation with the stated purpose of ``to 
simplify permitting for energy production in an environmentally 
sensitive manner'' consistent with the Secretary of Interior's goal of 
facilitating renewable energy projects. We think that MMS could add 
meaningful expertise and experience to the current regulatory process, 
and applaud all efforts to expedite clean energy projects. As noted 
below, however, we do have several particular concerns with the Bill 
and thus propose revisions that would preclude any potential for 
inadvertently adverse effects upon ongoing offshore renewable projects.

3. The Current Process for Permitting Offshore Wind Projects.
    As an initial matter, consideration of H.R. 5156 requires a clear 
understanding of the current regulatory treatment of renewable energy 
projects on the outer continental shelf (OCS), a matter on which there 
is often some confusion. Under current International and Federal law, 
any such project requires the affirmative prior authorization of the 
United States. Such authorization is given in the form of a permit from 
the Army Corps of Engineers under Section 10 of Rivers and Harbors Act. 
The ACE's powers under Section 10 have been held to constitute the 
``affirmative authorization'' of proposed structures pursuant to 
delegated Congressional authority. Pursuant to such provisions, ongoing 
OCS wind energy projects are subjected to comprehensive review under 
the regulations of the ACE and require the preparation of a Federal 
Environmental Impact Statement pursuant to the NEPA. Indeed, the 
following provisions of the ACE's regulations (33 CFR Sec. 325.3(c)) 
confirm the comprehensive scope of the currently required permit 
proceedings:
        The decision whether to issue a permit will be based on an 
        evaluation of the probable impact including cumulative impacts 
        of the proposed activity on the public interest. That decision 
        will reflect the national concern for both protection and 
        utilization of important resources. The benefits which 
        reasonably may be expected to accrue from the proposal must be 
        balanced against its reasonably foreseeable detriments. All 
        factors which may be relevant to the proposal will be 
        considered including the cumulative effects thereof; among 
        those are conservation, economics, aesthetics, general 
        environmental concerns, wetlands, historic properties, fish and 
        wildlife values, flood hazards, floodplain values, land use, 
        navigation, shoreline erosion and accretion, recreation, water 
        supply and conservation, water quality, energy needs, safety, 
        food and fiber production, mineral needs, considerations of 
        property ownership and, in general, the needs and welfare of 
        the people. (Emphasis added.)
Id. The recently issued scoping order of the Massachusetts Secretary of 
Environmental Affairs confirms the comprehensive range of issues now 
under review in Cape Wind's ongoing permit proceeding, and such order 
concludes that ``Cape Wind holds out the prospect of making 
Massachusetts a worldwide leader in renewable energy production'' and 
that ``the project represents the hope for a cleaner and more 
sustainable energy supply through application of innovative and simple 
technology.
    There is, however, no express provision under current law for the 
payment of royalties or other fees to the Federal government in 
connection with non-extractive renewable energy projects on the OCS. In 
contrast, in the case of the extraction of undersea oil, gas and 
minerals, the Outer Continental Shelf Lands Act (OCSLA) provides for 
royalty payments to the Federal government pursuant to ``mineral 
leases'' for the extraction, purchase and sale of submerged deposits. 
In this regard, current law treats offshore wind energy projects in a 
manner more comparable to the treatment of offshore thermal energy 
projects. In recognition of the special policy benefits and challenges 
of developing new renewable energy sources, the Ocean Thermal Energy 
Conversion Act (42 USC 9101) provides for the Federal permitting of 
thermal energy projects on the OCS, but does not require any lease 
payments or royalties to the Federal government. To the contrary, such 
act makes available certain financial assistance for the construction 
and operation of ocean thermal energy facilities.

4. This Bill Should Include Transitional Recognition of Pre-Enactment 
        Offshore Investment.
    While we support the initiative to streamline the current process, 
we are concerned that, in its current form, the proposed amendment to 
the OCSLA could introduce uncertainty and inadvertently delay the 
development and financing of those ongoing renewable energy projects 
that have already made major investments and that have permit 
applications pending in compliance with current law. Accordingly, we 
believe that the legislation should include some provision for the 
recognition and transitional treatment of such ongoing projects so as 
to avoid the possibility of such an unintended adverse result. Federal 
and international law have in the past afforded recognition and 
transitional treatment of investment in offshore developments 
undertaken prior to the effective date of new regulatory and 
legislative regimes. For example, when the United Nations Law of the 
Sea Conference adopted new protocols for minerals mining operations 
beneath the high seas, it included specific transitional protections 
for ``preparatory investment in pioneer activities,'' i.e., development 
activities undertaken prior to the effectiveness of the new protocols. 
See, UNCLOS, Art. 308, Sec. 5. Further, when Congress adopted 
corresponding provisions in the Deep Seabed Hard Mineral Resources Act 
(P.L. 96-283, 30 U.S.C. 1401, et seq., the ``Act''), it similarly 
included specific recognition of offshore developments and investments 
that had been undertaken by United States citizens, and articulated the 
following Federal policy objective of assuring the ``security of 
tenure'' of such pre-enactment activities:
        It is the intent of Congress [that]...any international 
        agreement to which the United States becomes a party should, in 
        addition to promoting other national oceans objectives--
        ,...provide security of tenure by recognizing the rights of 
        United States citizens who have undertaken exploration or 
        commercial recovery under title 1 [30 U.S.C. Sec. Sec. 1411, et 
        seq.] before such agreement enters into force with respect to 
        the United States, to continue their operations under terms, 
        conditions, and restrictions which do not impose significant 
        new economic burdens upon such citizens with respect to such 
        operations with the effect of preventing the continuation of 
        such operations on a viable economic basis...
30 U.S.C. 1441 (emphasis added).
    Pursuant to such statutory provisions, the National Oceanic and 
Atmospheric Administration (``NOAA'') subsequently adopted regulations 
that provide transitional protections and ``priorities of right'' for 
offshore projects commenced before the effective date of the Act. See, 
15 CFR Part 970, Subpart C (``Procedures for Applications Based on 
Exploration Commenced Before June 28, 1980''). Such regulations 
established a procedure whereby a United States citizen who had engaged 
in substantial offshore mineral development before the effective date 
of the Act ``qualifies as a pre-enactment explorer'' and is thereby 
allowed to continue to engage in such exploration, with procedures ``to 
receive a pre-enactment explorer priority of right'' for the issuance 
of a mining license pursuant to the Act. See, Id. at Sec. 970.301. Such 
regulations also provided a specific window within which pre-enactment 
developers are afforded a ``priority of right'' to the area of such 
development, as follows:
        Effect on Priority for New Entrants. (1) A pre-enactment 
        explorer is entitled to a priority of right over a new entrant 
        for any area in which the pre-enactment explorer has engaged in 
        exploration prior to June 28, 1980 if, with respect to that 
        area, the pre-enactment explorer files an application in 
        accordance with this part on or after January 25, 1982 and on 
        or before the closing date for pre-enactment explorer 
        applications established under Sec. 970.301(b).
15 CFR Sec. 907.302(m). The rationale for such transitional provisions 
applies with equal force to any proposed amendment of the OCSLA under 
H.R. 5156 respecting renewable energy projects. The addition of 
comparable transitional provisions to H.R. 5156 would also avoid 
potential delays and financial uncertainties and thus be consistent 
with Federal policy as reflected in Executive Order 13212, ``Actions to 
Expedite Energy-Related Projects,'' as well as the general charge of 
the White House Task Force for Energy Project Streamlining.

5. If New Fees and Charges for Wind Energy Projects are Assessed 
        Pursuant to H.R. 5156, They Should Not be so Large as to 
        Counteract Current Economic Incentives for Renewable Energy 
        Projects.
    We also think it very important that, if any new fees for wind 
energy projects are to be payable to the government under H.R. 5156, 
they should not be set so high as to discourage investment in this new 
and developing industry, which still has levels of introductory risk 
and uncertainty that do not exist in the well-established oil and gas 
industries. It would also seem reasonable to assure that any new fees 
do not unduly offset the economic incentives provided by the production 
tax credit and other current programs, and do not put offshore wind at 
a disadvantage to other generating technologies. As noted above the 
Ocean Thermal Energy Conversion Act provides for the Federal permitting 
and financial assistance of offshore facilities without the requirement 
of royalties or fees.

6. Conclusion.
    For the foregoing reasons, we applaud initiatives to expedite and 
facilitate offshore renewable energy in areas of the OCS that are 
subject to the jurisdictions of the United States. It is important, 
however, that any proposed legislation contain provisions for the 
recognition and transitional treatment of pre-enactment investments 
undertaken pursuant to current law, with particular emphasis on 
avoiding any cloud of uncertainty that could impede project financing. 
Finally, if new fees are to be assessed to ongoing OCS renewable energy 
projects pursuant to some legislative change, it is critical that the 
amount be (i) determinable as soon as possible and (ii) not so large as 
to offset the currently effective economic incentives for the 
developing offshore renewable energy industry.
    Thank you for your consideration and please feel free to call if 
you should have any questions or comments.
                                 ______
                                 


    [An Email communication from Captain Wayne Genther 
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