FERC Says That A Buoy Is a Powerhouse; Enters the Jurisdictional Fray

On February 20, 2003, the Federal Energy Regulatory Commission (FERC), an agency charged with administration of private hydroelectric development on the nation's rivers and streams issued an order in AquaEnergy Project No. DI02-3 claiming jurisdiction over AquaEnergy's proposed Makah Bay Pilot ocean energy project, to be sited three miles off the coast of Washington state, in the Olympic Coast National Marine Sanctuary in Makah Bay. (We'll post a link to the order when it's published). The proposed pilot project consisted of four floating buoys attached to the seabed, each containing electricity generating turbines powered by pressurized seawater. Project power would be delivered ashore via an underwater transmission line to a power station located on the Makah Indian reservation (the tribe is one of the project's greatest supporters)for conditioning and sent on to the grid.

By way of simple background, under the Federal Power Act, FERC only has the power to license hydroelectric projects which the Act defines as consisting of a "dam, reservoir, conduit, powerhouse" and related facilities. Well, AquaEnergy's project clearly did not have a dam, conduit or reservoir (unless FERC wanted to claim that the ocean is a reservoir, but it didn't go quite that far). That left the question of whether the project included a "powerhouse." Notwithstanding its eighty years of administering a hydro program, FERC needed to resort to an ordinary dictionary to define powerhouse. The dictionary in turn stated that a powerhouse is "a building where electricity is generated." FERC then changed the word "building" to "structure" and concluded that: "Buoys are structures with equipment for generation of power so they are powerhouses" for purposes of the statute.

In the absence of FERC jurisdiction, Aqua Energy had planned to apply to the Corps of Engineers, NOAA (which administers the sanctuary) and myriad other state agencies for requisite permits. As many of these permits are not preempted by the Federal Power Act, FERC's announcement of jurisdiction will add another layer of regulation before the project can get in the water. Sure, a court might overturn FERC's order, just like a court will eventually work out whether the Corps has jurisdiction to permit the Cape Wind project. But court proceedings are time consuming and no substitute for some real guidance about which agency controls the process. So state tuned as this newest saga unfolds.