From our colleague Michael O’Connell:

On May 18, 2010, California and the Federal Energy Regulatory Commission (FERC) signed a Memorandum of Understanding (MOU) to coordinate federal and state procedures and schedules for development of hydrokinetic projects off California’s coast. FERC previously entered MOUs for such coordination with Oregon, Washington and Maine.

The California-FERC MOU provides that the parties will encourage developers to seek pilot project licenses prior to a full commercial license. The footprint and number of devices deployed in California waters for testing would be limited under pilot project licenses in order to minimize environmental risk. FERC’s 2008 hydrokinetic pilot project white paper provides that pilot licenses would be issued for five years in order to allow licensees to conduct device testing and monitoring in support of studies required by applications for longer-term licenses. The California-FERC MOU also provides for consultation with stakeholders on the design of studies and other environmental matters.

According to the MOU, permits, leases and licenses issued by California agencies will require technology performance reporting and study results together with safeguards to ensure that projects will not have significant adverse effects on environmental, economic or cultural resources. The MOU parties also agree to share information from project developers regarding their facility’s energy production and “if applicable, power purchase contracts awards, during a project’s licensing application process and/or license term; provided that dissemination of the information is not otherwise protected from disclosure.” These MOU provisions are likely to raise confidentiality concerns among developers. The MOU recognizes that FERC cannot issue a license for a hydrokinetic project within California marine waters unless certain concurrences are issued or waived that a project is consistent with California’s Coastal Management Program. Any license issued by FERC will include, to the maximum extent practicable, terms and conditions determined by California agencies to be necessary to avoid, minimize and mitigate damage to fish, wildlife, and public trust resources.

The California-FERC MOU confirms state support for development of wave energy projects that can play a significant role in meeting the California’s goal of producing 33 percent of its electricity from renewable energy by 2020.