Hurricane Sandy prompts Jones Act waiver

Hurricane Sandy's disruption of petroleum shipments and refining has led Secretary of Homeland Security Janet Napolitano to issue a temporary waiver allowing foreign oil tankers to enter ports in the northeastern United States.

The Jones Act, a federal law enacted as part of the Merchant Marine Act of 1920, limits who may carry on coastal shipping between domestic ports.  This so-called cabotage law generally requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents.

Hurricane Sandy's impacts to northeastern energy infrastructure included disruption of oil and gasoline supplies in the area near New York City and New Jersey.  Between reduced supply and concentrated demand, gasoline is reported to be in shortage conditions.  Long lines are reported at gas stations, and demand at some stations has led them to run out of gasoline. 

In an attempt to alleviate the shortage, today Secretary of Homeland Security Janet Napolitano issued a temporary, blanket waiver of the Jones Act.  The waiver is designed to allow foreign-flagged oil tankers, that would otherwise be barred from the U.S. coastwise trade, to ship petroleum products from the Gulf of Mexico to Northeastern ports.  The waiver will remain operative through November 13th.

NYC tidal project gets pilot license

Federal regulators have issued a pilot project license to a tidal power proposal to be developed in the East River off New York City.  Yesterday the Federal Energy Regulatory Commission awarded a license to the Roosevelt Island Tidal Energy Project (62-page PDF).

As described in the license, the Roosevelt Island project will start relatively small, and is licensed for additional phases of growth.  The first phase entails deployment of three 35-kW Kinetic Hydropower Systems developed by Verdant Power, LLC.  Each of these units has a 5-meter diameter turbine connected to  generator.  Over time, additional turbine units could be deployed, up to a total of 30 turbines, for a total nameplate capacity of 1,050 kilowatts.

Verdant chose to seek a pilot project license for the Roosevelt Island tidal development.  FERC views its hydrokinetic pilot project licensing process as a variant of its Integrated Licensing Process.  Compared to other paths to FERC hydropower licenses, the pilot project process is designed to allow developers to test new hydrokinetic and hydropower technologies while minimizing both their costs and the risk of adverse environmental impacts.

Commission staff have described the ideal pilot project as (1) small, (2) short term, (3) located in environmentally non-sensitive areas based on the Commission’s review of the record, (4) removable and able to be shut down on short notice, (5) removed, with the site restored, before the end of the license term (unless a new license is granted), and (6) initiated by a draft application in a form sufficient to support environmental analysis.  Based on the Roosevelt Island project's similarity to this conceptual ideal, FERC staff recommended that Verdant pursue a pilot project license.

Verdant's pilot project license includes a variety of conditions and mitigation requirements.  Among these are a requirement that Verdant commence construction of Phase 1 within two years, and to complete construction of Phase 3 within six years of the issuance date of the license.  If Verdant meets these deadlines, the Roosevelt Island could be producing electricity within the next few years.

Other innovative ocean energy projects are pursuing FERC's pilot project licensure path, such as the Cobscook Bay Tidal Energy Project proposed by Ocean Renewable Power Company Maine, LLC.  Verdant's license is the first hydrokinetic pilot project license that FERC has issued; others may follow in its footsteps.