BOEMRE Slows Down; Maryland Picks Up the Pace

Although there is still one last installment of my "What's Next: 2011 Edition" series yet to be published, I had no choice but to interrupt myself with two new developments related to two of my earlier predictions:

• First, BOEMRE's announcement regarding its revised offshore renewable project permitting rules will directly impact my predictions regarding BOEMRE's anticipated Requests for Interest. In short, the revised shortened timeline for these Requests for Interest is, for the moment, extended.
• Second, as I predicted here, Maryland Governor Martin O'Malley has issued a more concrete summary of the legislation he plans to pursue in support of offshore wind projects off of Maryland's coast.
  

A Speedier Permitting Process? Not So Fast, Thanks to Rulemaking Mandates.

Ah, the absurdity that can result from bureaucratic efforts to facilitate efficiency: BOEMRE's announcement that it must now proceed through the rulemaking process twice in order to promulgate a rule designed to eliminate regulatory redundancy in the federal permitting process for offshore wind projects may just take the prize.

BOEMRE originally unveiled the Rule, part of the "Smart from the Start program" on November 26, 2010. On Monday, January 21, 2011, BOEMRE announced that it now plans to republish the November 26, 2010 Rule within the next 30 days as a Proposed Rule. This accouncement indicates that (1) BOEMRE will be shepherding the revised rule through standard informal notice and comment rulemaking procedures; and (2) BOEMRE received at least one adverse comment or notice during the 30 day comment period following the November 26, 2010 direct final rule publication. BOEMRE has not released any information regarding the basis of the adverse comments or notices. The need to proceed through a second round of rulemaking procedures means that the November 26, 2010 Rule will not go into effect until - at the earliest - May 2011.

The November 26, 2011 Rule, which amends the 2009 MMS Final Rule governing offshore renewable energy project permitting, was designed to eliminate a redundant step in the noncompetitive leasing process for commercial renewable energy development on the Outer Continental Shelf. Under the 2009 MMS Final Rule, BOEMRE must issue a second Request for Interest with regard to leasing specific areas of interest on the Outer Continental Shelf even if only one entity responds to BOEMRE's first request. The November 26, 2011 Rule eliminates BOEMRE's obligation to issue a second request for interest in the event that there is only one interested entity -- resulting in a time savings of up to six to twelve months in the leasing process. If time is money in the project development arena- and it is- the elimination of pointless bureaucratic delay seems like a no-brainer.

In an attempt to codify the 2009 Rule as quickly as possible, BOEMRE decided to employ the little-used "direct final rulemaking" process. The direct final rulemaking process is an accelerated version of the standard notice-and-comment method of informal rulemaking set forth under the Administrative Procedure Act that negates the requirement that an agency proceed through rounds of deliberation at both the proposal and final promulgation stages. See 5 U.S.C. 553. Typically, an agency will use the direct final rulemaking process when it believes that a rule is so uncontroversial that the standard notice-and-comment method would be superfluous and impose needless delay.

Under the direct final rulemaking process, BOEMRE published the Rule in the Federal Register accompanied by the following statement:

This rule becomes effective on January 25, 2011 unless BOEMRE publishes a notice withdrawing this rule before that date.

See November 26 Rule. If no adverse comments had been received before January 25, 2011, the Rule would have been effective as of January 25, 2011. However, under the APA, BOEMRE was compelled to withdraw the Rule upon receipt of even one adverse comments or notices during the comment period compelled.

Nothing in the APA, however, prevents BOEMRE from republishing the November 26, 2010 Rule and initiating the standard informal notice and comment rulemaking process. Under the standard rulemaking process, BOEMRE must first publish a "proposed rule" in the Federal Register. BOEMRE has stated that it intends to issue a proposed rule within the next 30 days. The proposed rule will include a notice setting forth a period of time during which the public and interested parties may submit comments in support of or adverse to the Rule-- typically, between 30 and 180 days. After reviewing all comments and notices, BOEMRE will then be required to publish a "final rule" in the Federal Register. The "final rule" must include BOEMRE's written responses to the substance of each and every comment or notice recieved during the comment period. Subject to any further challenges or comments, the Rule may then be codified into the Code of Federal Regulations ("CFR"). See 5 U.S.C. 553.

So what are the immediate impacts? You may recall that BOEMRE issued an RFI for specially identified submerged lands off of the Maryland coast on April 26, 2010. By way of a letter dated November 8, 2010, BOEMRE notified Bluewater Wind, LLC that it has submitted the only eligible submission. Under the November 26, 2010 Rule, BOEMRE would not be required to issue a second RFI and Bluewater Wind, LLC would be permitted to proceed to the next step in the permitting process immediately. However, because the Rule has not gone into effect, BOEMRE has now issued a second RFI in accordance with the 2009 MMS Final Rule.

Maryland: Proposed Offshore Wind Legislation

Governor Martin O'Malley revealed further details about the legislation he intends to sponsor this year in support of a Maryland-based offshore wind industry. According to the summary, O'Malley's proposed legislation will:

direct the Public Service Commission to require Maryland’s five distribution utilities to award long-term contracts to procure between 400 to 600 megawatts of offshore wind energy. The Commission will oversee the procurement process and approve the final contracts which must be for a period of not less than 20 years. Any additional costs of electricity from offshore wind, and ultimately the additional savings, will be shared by all ratepayers and customer classes in the State.

O'Malley's proposed legislation appears to track similar legislation adopted last year in New Jersey.