1. Tidal Energy in Alaska Permitting Issues Michael Murphy Devine Tarbell & Associates

2. Overview Interest in United States and Alaska Differences - Conventional Hydro and Tidal Power Federal Regulatory Jurisdiction Federal Energy Regulatory Commission Other Applicable Regulations Minerals Management Service Issues/Challenges Discussion Panel

3. Activity in United States EPRI Reports Currently 43 Applications for Wave and Tidal Preliminary Permits at FERC 36 Applications for Tidal Verdant Power RITE Project

4. Proposed Projects Preliminary Permit Applications Currently with FERC 1 Kachemak Bay – Alaska Tidal Energy Co. 2 Cook Inlet – Alaska Tidal Energy Co. 3 Cook Inlet – Chevron Ventures 4 Cook Inlet – ORPC 5 Cook Inlet – Natural Currents 6 Resurrection Bay – ORPC 7 Icy passage – Alaska Energy Co. 8 Gastineau Channel – Alaska Energy Co. 9 Angoon – Natural Currents 10 Wrangell Narrows – Alaska Energy Co.

5. Differences - Conventional Hydropower and Tidal Power Project/Technology Specific - Instream / Tidal Barrage –Instream – No Dams –Little Change in Water Pressure –Slower Turbine Rotation Speed –Underwater

6. Federal Regulatory Jurisdiction Federal Power Act Section 23(b)(1) FPA U.S.C. 817(1) Defines FERC Jurisdiction over Water Power it is located on a navigable water of the United States; occupies lands of the United States; utilizes surplus water or water power from a government dam; or is located on a body of water over which Congress has Commerce Clause jurisdiction, project construction occurred on or after August 26, 1935, and the project affects the interests of interstate or foreign commerce. FERC jurisdiction attaches if any ONE of these 4 conditions is true.

7. Federal Regulatory Jurisdiction FERC issues licenses for up to 50 years for constructing, operating and maintaining non federal hydropower projects The Electric Consumers Protection Act mandated that FERC give equal consideration to both power and non power resources when issuing hydropower licenses. Each license will include terms and conditions to protect, mitigate for damage, and enhance fish and wildlife and their habitat. Applicability to Ocean Energy Projects?

8. Federal Energy Regulatory Commission Makah Bay Pilot Power Project, WA FERC Order: AquaEnergy Group, Ltd., D102-3-01, 102 FERC ¶ 61,242 (February 28, 2003) The same criteria that applies to traditional hydroelectric projects applies to tidal and wave power Section 23(b)(1) FPA, §16 U.S.C. 817(1) –it is located on a navigable water of the United States; –occupies lands of the United States; –utilizes surplus water or water power from a government dam; or –is located on a body of water over which Congress has Commerce Clause jurisdiction, project construction occurred on or after August 26, 1935, and the project affects the interests of interstate or foreign commerce. –FERC jurisdiction attaches if any ONE of these 4 conditions is true.

9. Federal Energy Regulatory Commission Green Wave Rhode Island Ocean Wave Energy Project FERC Order: Energetech America, LLC., 113 FERC ¶ 62,027 (2005) Does not provide licensing relief for Oscillating Water Column Technologies that rely on air to generate electricity

10. Federal Energy Regulatory Commission Roosevelt Island Tidal Energy Project, NY FERC Orders: Verdant Power, LLC., 112 FERC ¶ 61,024 (2005) and 61,143 (2005) Provides licensing “relief” provided that: Technology must be experimental; Deployment must be temporary and in support of a license; and No net economic impact on national electricity grid.

11. What is the FERC Process? Preliminary Permit –Three Years –Section 5 of the Federal Power Act (16 U.S.C. §798) authorizes FERC to issue preliminary permits. As defined in this section, a preliminary permit is issued “for the sole purpose of maintaining priority of application for a license.” As further described in the Commission’s regulations, in addition to securing priority of application for license, a preliminary permit also provides a prospective developer time to evaluate the feasibility of and complete the studies required for a development application (18 CFR §4.80).16 U.S.C. §79818 CFR §4.80 –Does not authorize construction –Not a pre requisite for a license application, does not start the licensing process –No license application can be accepted by FERC

12. What is the FERC Process? Licensing Process - Integrated Licensing Process (ILP) is the Default Process –Traditional Licensing Process and Alternative Licensing Processes –Pre-Application Document/Notice of Intent –Request for Waiver –FERC Consultation – Stakeholder Involvement - Resource Concerns –Study Plan Development –Draft and Final License Applications Exemption from Licensing – If project is less than 5 MW applicant may apply for exemption. Procedure for applying is similar (3 stage process) as for a license. If granted FERC will impose terms and conditions.

14. FERC License Application Exhibit A – Project Description Exhibit B – Project Operation/Resource Utilization Exhibit C – Construction History and Construction Schedule Exhibit D – Statement of Costs and Financing Exhibit E – Environmental Exhibit F – Design Drawings Exhibit G – Project Boundary Exhibit H – Plans to Operate Project Efficiently –Critical Energy Infrastructure Information (CEII) not included in copies of application for general public

15. Other Applicable Statues Section 404 Clean Water Act Section 10 River and Harbors Act Section 401 Clean Water Act Endangered Species Act Coastal Zone Management Act National Historic Preservation Act Marine Mammal Protection Act Migratory Bird Protection Act Magnuson-Stevenson Fishery Act Applicable State Regulations

16. Other Applicable Regulations FPA Section 32 – FERC Grants Alaska State Jurisdiction over Small Hydroelectric Projects Qualifying Projects: –Power production capacity 5,000 kilowatts or less –Not part of a licensed project –Located entirely within the state boundaries –Not located in whole or part of any Indian reservation, conservation system unit, or segment of a river designated for study for addition to the Wild and Scenic Rivers System

17. Other Applicable Regulations Regulatory Commission of Alaska –Jan 31, 2003 AS 42.45.350 effectively states that RCA shall adopt regulations to establish a state regulatory program for qualifying water power development projects –RCA must protect the public interest and environment to the same extent provided by the FPA, the Endangered Species Act, and other applicable federal laws, i.e. Clean Water Act (Section 401) –Status - Ongoing

18. Federal Energy Regulatory Commission December 6, 2006 Technical Workshop Focused on Environmental, Financial, and Regulatory Aspects of Technologies Next Steps?

19. Resource Issues Aquatic Rare, Threatened and Endangered Species Marine Mammals Wildlife Recreation Historic – Cultural Land Use Other Competing Uses –Navigation –Commercial Fishing

20. Process Issues – 36 Pending Preliminary Tidal Permit applications at FERC – Adequate progress during permit term – Preliminary Permit term versus licensing process – Overlapping boundaries – Competing applications – Site banking

21. Minerals Management Service Section 388 of the Energy Policy Act of 2005 Grant Leases on the Outer Continental Shelf Typically Three Miles and Greater from Shore Advance Notice of Proposed Rule Making Regional Workshops

22. Additional Information Michael Murphy207.233.8291 (Cell) 207.775.4495 (Office)