```

[Senate Report 113-294]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 634
113th Congress      }                         {             Report
                                 SENATE
 2d Session         }                         {             113-294

======================================================================
 
              MARINE AND HYDROKINETIC RENEWABLE ENERGY ACT

                                _______
                                

               December 10, 2014.--Ordered to be printed

                                _______
                                

   Ms. Landrieu, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1419]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1419) to promote research, development, 
and demonstration of marine and hydrokinetic renewable energy 
technologies, and for other purposes, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Marine and 
Hydrokinetic Renewable Energy Act of 2014''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:
Sec. 1. Short title; table of contents.

     TITLE I--MARINE AND HYDROKINETIC RENEWABLE ENERGY TECHNOLOGIES

Sec. 101. Definition of marine and hydrokinetic renewable energy.
Sec. 102. Marine and hydrokinetic renewable energy research and 
development.
Sec. 103. National Marine Renewable Energy Research, Development, and 
Demonstration Centers.
Sec. 104. Authorization of appropriations.

     TITLE II--MARINE AND HYDROKINETIC RENEWABLE ENERGY REGULATORY 
                               EFFICIENCY

Sec. 201. Marine and hydrokinetic renewable energy projects and 
facilities.

     TITLE I--MARINE AND HYDROKINETIC RENEWABLE ENERGY TECHNOLOGIES

SEC. 101. DEFINITION OF MARINE AND HYDROKINETIC RENEWABLE ENERGY.

  Section 632 of the Energy Independence and Security Act of 2007 (42 
U.S.C. 17211) is amended in the matter preceding paragraph (1) by 
striking ``electrical''.

SEC. 102. MARINE AND HYDROKINETIC RENEWABLE ENERGY RESEARCH AND 
                    DEVELOPMENT.

  Section 633 of the Energy Independence and Security Act of 2007 (42 
U.S.C. 17212) is amended to read as follows:

``SEC. 633. MARINE AND HYDROKINETIC RENEWABLE ENERGY RESEARCH AND 
                    DEVELOPMENT.

  ``The Secretary, in consultation with the Secretary of the Interior, 
the Secretary of Commerce, and the Federal Energy Regulatory 
Commission, shall carry out a program of research, development, 
demonstration, and commercial application to accelerate the 
introduction of marine and hydrokinetic renewable energy production 
into the United States energy supply, giving priority to fostering 
accelerated research, development, and commercialization of technology, 
including programs--
          ``(1) to assist technology development to improve the 
        components, processes, and systems used for power generation 
        from marine and hydrokinetic renewable energy resources;
          ``(2) to establish critical testing infrastructure 
        necessary--
                  ``(A) to cost effectively and efficiently test and 
                prove marine and hydrokinetic renewable energy devices; 
                and
                  ``(B) to accelerate the technological readiness and 
                commercialization of those devices;
          ``(3) to support efforts to increase the efficiency of energy 
        conversion, lower the cost, increase the use, improve the 
        reliability, and demonstrate the applicability of marine and 
        hydrokinetic renewable energy technologies by participating in 
        demonstration projects;
          ``(4) to investigate variability issues and the efficient and 
        reliable integration of marine and hydrokinetic renewable 
        energy with the utility grid;
          ``(5) to identify and study critical short- and long-term 
        needs to create a sustainable marine and hydrokinetic renewable 
        energy supply chain based in the United States;
          ``(6) to increase the reliability and survivability of marine 
        and hydrokinetic renewable energy technologies;
          ``(7) to verify the performance, reliability, 
        maintainability, and cost of new marine and hydrokinetic 
        renewable energy device designs and system components in an 
        operating environment;
          ``(8) to coordinate and avoid duplication of activities 
        across programs of the Department and other applicable Federal 
        agencies, including National Laboratories and to coordinate 
        public-private collaboration in all programs under this 
        section;
          ``(9) to identify opportunities for joint research and 
        development programs and development of economies of scale 
        between--
                  ``(A) marine and hydrokinetic renewable energy 
                technologies; and
                  ``(B) other renewable energy and fossil energy 
                programs, offshore oil and gas production activities, 
                and activities of the Department of Defense; and
          ``(10) to support in-water technology development with 
        international partners using existing cooperative procedures 
        (including memoranda of understanding)--
                  ``(A) to allow cooperative funding and other support 
                of value to be exchanged and leveraged; and
                  ``(B) to encourage the participation of international 
                research centers and companies within the United States 
                and the participation of United States research centers 
                and companies in international projects.''.

SEC. 103. NATIONAL MARINE RENEWABLE ENERGY RESEARCH, DEVELOPMENT, AND 
                    DEMONSTRATION CENTERS.

  Section 634 of the Energy Independence and Security Act of 2007 (42 
U.S.C. 17213) is amended by striking subsection (b) and inserting the 
following:
  ``(b) Purposes.--A Center (in coordination with the Department and 
National Laboratories) shall--
          ``(1) advance research, development, demonstration, and 
        commercial application of marine and hydrokinetic renewable 
        energy technologies;
          ``(2) support in-water testing and demonstration of marine 
        and hydrokinetic renewable energy technologies, including 
        facilities capable of testing--
                  ``(A) marine and hydrokinetic renewable energy 
                systems of various technology readiness levels and 
                scales;
                  ``(B) a variety of technologies in multiple test 
                berths at a single location; and
                  ``(C) arrays of technology devices; and
          ``(3) serve as information clearinghouses for the marine and 
        hydrokinetic renewable energy industry by collecting and 
        disseminating information on best practices in all areas 
        relating to developing and managing marine and hydrokinetic 
        renewable energy resources and energy systems.''.

SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

  Section 636 of the Energy Independence and Security Act of 2007 (42 
U.S.C. 17215) is amended by striking ``2008 through 2012'' and 
inserting ``2015 through 2018''.

     TITLE II--MARINE AND HYDROKINETIC RENEWABLE ENERGY REGULATORY 
                               EFFICIENCY

SEC. 201. MARINE AND HYDROKINETIC RENEWABLE ENERGY PROJECTS AND 
                    FACILITIES.

  Part I of the Federal Power Act (16 U.S.C. 792 et seq.) is amended by 
adding at the end the following:

``SEC. 34. PILOT LICENSE FOR MARINE AND HYDROKINETIC RENEWABLE ENERGY 
                    PROJECTS.

  ``(a) Definition of Hydrokinetic Pilot Project.--
          ``(1) In general.--In this section, the term `hydrokinetic 
        pilot project' means a facility that generates energy from--
                  ``(A) waves, tides, or currents in an ocean, estuary, 
                or tidal area; or
                  ``(B) free-flowing water in a river, lake, or stream.
          ``(2) Exclusions.--The term `hydrokinetic pilot project' does 
        not include a project that uses a dam or other impoundment for 
        electric power purposes.
  ``(b) Pilot Licenses Authorized.--The Commission may issue a pilot 
license to construct, operate, and maintain a hydrokinetic pilot 
project that meets the criteria listed in subsection (c).
  ``(c) License Criteria.--The Commission may issue a pilot license for 
a hydrokinetic pilot project if the project--
          ``(1) will have an installed capacity of not more than 10 
        megawatts;
          ``(2) is for a term of not more than 10 years;
          ``(3) will not cause a significant adverse environmental 
        impact or interfere with navigation;
          ``(4) is removable and can shut down on reasonable notice in 
        the event of a significant adverse safety, navigation, or 
        environmental impact;
          ``(5) can be removed, and the site can be restored, by the 
        end of the license term, unless the project has obtained a new 
        license or the Commission has determined, based on substantial 
        evidence, that the project should not be removed because it 
        would be preferable for environmental or other reasons not to; 
        and
          ``(6) is primarily for the purpose of--
                  ``(A) testing new hydrokinetic technologies, both 
                single devices and in arrays of devices;
                  ``(B) locating appropriate sites for new hydrokinetic 
                technologies; or
                  ``(C) determining the environmental and other effects 
                of a hydrokinetic technology.
  ``(d) Lead Agency.--In carrying out this section, the Commission 
shall act as the lead agency--
          ``(1) to coordinate all applicable Federal authorizations; 
        and
          ``(2) to comply with the National Environmental Policy Act of 
        1969 (42 U.S.C. 4321 et seq.).
  ``(e) Schedule Goals.--
          ``(1) In general.--Not later than 30 days after the date on 
        which the Commission receives a completed application, and 
        following consultation with Federal, State, and local agencies 
        with jurisdiction over the hydrokinetic pilot project, the 
        Commission shall develop and issue pilot license approval 
        process scheduling goals that cover all Federal, State, and 
        local permits required by law.
          ``(2) Compliance.--Applicable Federal, State, and local 
        agencies shall comply with the goals established under 
        paragraph (1) to the maximum extent practicable, consistent 
        with applicable law.
          ``(3) 1-year goal.--It shall be the goal of the Commission 
        and the other applicable agencies to complete the pilot license 
        process by not later than 1 year after the date on which the 
        Commission receives the completed application.
  ``(f) Size Limitation.--For proposed projects located in an estuary, 
tidal area, river, lake, or stream, the Commission shall determine the 
size limit on a case-by-case basis, taking into account all relevant 
factors.
  ``(g) Extensions Authorized.--On application by a project, the 
Commission may make a 1-time extension of a pilot license for a term 
not to exceed 5 years.''.

                                Purpose

    The purpose of S. 1419 is to promote research, development, 
and demonstration of marine and hydrokinetic renewable energy 
technologies.

                          Background and Need

    Marine hydrokinetic renewable energy (MHK) is a form of 
hydropower that generates energy from free-flowing waters, such 
as waves, currents, an estuary, or a tidal area, as well as 
from the free-flowing water in a river, lake, or stream. MHK 
differs from conventional hydropower in that it generates 
energy without the use of a dam or other impoundment.
    The United States has not been a world leader in the 
development of cutting edge MHK technologies to date. Instead, 
the United States, with its significant wave, tidal, current, 
and in-stream energy resource potential serves as a potential 
market for its international competitors in this new industrial 
sector. The Electric Power Research Institute has estimated 
that the commercially available wave energy potential off the 
coast of the United States is roughly 252 million megawatt 
hours--equal to 6.5 percent of today's entire generating 
portfolio. This is approximately the amount of electricity 
presently being produced by the existing domestic fleet of 
conventional hydroelectric dams.
    MHK has potential to generate a substantial amount of clean 
renewable energy in the United States and across the globe. It 
is poised to be a key participant in the transition to a low 
carbon economy and has the potential to be part of an ``all of 
the above'' energy strategy. However, to date there has been no 
successful commercial development of MHK in the United States 
due to technological and regulatory cost barriers.
    S. 1419 is intended to help commercialize MHK technologies 
through research and development and put in place a more 
efficient and timely regulatory process for the siting of pilot 
projects intended to demonstrate the viability of these 
technologies.

                          Legislative History

    S. 1419 was introduced by Senator Wyden on August 1, 2013. 
Senators Murkowski, King, Merkley, and Schatz are cosponsors.
    The Subcommittee on Water and Power held a hearing on S. 
1419 on February 27, 2014 (S. Hrg. 113-284). The Committee 
adopted an amendment in the nature of a substitute and ordered 
S. 1419, as amended, reported favorably on November 13, 2014.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on November 13, 2014, by a voice vote of 
a quorum present, recommends that the Senate pass S. 1419, if 
amended as described herein. Senator Barrasso asked to be 
recorded as voting no.

                          Committee Amendment

    During its consideration of S. 1419, the Committee adopted 
an amendment in the nature of a substitute containing technical 
changes to the bill.

                      Section-by-Section Analysis

    Section 1 contains the Act's short title, the ``Marine and 
Hydrokinetic Renewable Energy Act of 2014,'' and sets forth the 
bill's table of contents.
    Section 101 amends the definition of marine and 
hydrokinetic (MHK) renewable energy in section 632 of the 
Energy Security and Independence Act of 2007 to include all 
forms of energy, not solely electricity.
    Section 102 amends section 633 of the Energy Security and 
Independence Act of 2007 to authorize the Secretary of Energy, 
in consultation with the Secretary of the Interior, the 
Secretary of Commerce, and the Federal Energy Regulatory 
Commission (FERC) to carry out a program of MHK research, 
development, demonstration and commercial application to 
accelerate the introduction of MHK energy production to the 
U.S. energy supply.
    Section 103 amends section 634 of the Energy Security and 
Independence Act of 2007 to provide that any National Marine 
Renewable Energy Research, Development, and Demonstration 
Center (Center) shall advance research and development, 
demonstration, and commercial application of a wide range of 
MHK renewable energy technologies types and scales through in-
water testing and other means. It adds a new section 634(b)(3) 
to require centers Center to also serve as information 
clearinghouses for the MHK industry.
    Section 104 amends section 636 of the Energy Security and 
Independence Act of 2007 to authorize funding of up to $50 
million per year for fiscal years 2015 through 2018 for the 
Department of Energy's MHK research and development program.
    Section 201 adds a new section 34 to part 1 of the Federal 
Power Act. Subsection (b) of the new section 34 authorizes FERC 
to issue a pilot license to construct operate and maintain an 
MHK pilot project that has a capacity of no more than 10 MW. 
Subsection (c) establishes licensing criteria for MHK projects. 
The criteria provide for a term of not more than 10 years (with 
a possible one-time extension of up to five years) and require 
that the project will not cause a significant adverse 
environmental impact or interfere with navigation, be removable 
and be capable of shutting down on reasonable notice; and be 
primarily for the purpose of testing, locating appropriate 
sites, or determining the technology's environmental effects. 
Subsection (d) provides that the FERC will be the lead agency 
for the purposes of compliance with the National Environmental 
Policy Act. Subsection (e) establishes the scheduling goal that 
the FERC and other regulatory agencies complete the pilot 
license process by not later than one-year after receipt of a 
complete application.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office.

S. 1419--Marine and Hydrokinetic Renewable Energy Act of 2014

    Summary: S. 1419 would authorize appropriations for 
activities aimed at promoting the development of marine and 
hydrokinetic energy devices that produce energy from moving 
water. The bill also would authorize the Federal Energy 
Regulatory Commission (FERC) to issue licenses for pilot 
projects to test new hydrokinetic technologies.
    Assuming appropriation of the authorized amounts, CBO 
estimates that implementing S. 1419 would cost $192 million 
over the 2015 2019 period. Pay-as-you-go procedures do not 
apply to this legislation because it would not affect direct 
spending or revenues.
    S. 1419 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 1419 is shown in the following table. 
The costs of this legislation fall within budget function 270 
(energy).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                                                                           2015
                                                              2015     2016     2017     2018     2019     2019
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Level.......................................       50       50       50       50        0      200
Estimated Outlays.........................................       12       30       50       50       50      192
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: S. 1419 would authorize the 
appropriation of $50 million a year over the 2015 2018 period 
for the Department of Energy (DOE) to promote research, 
development, and commercial application of marine and 
hydrokinetic energy devices. In 2014, DOE received $41 million 
for activities aimed and promoting such technologies. Based on 
historical spending patterns for such activities, CBO estimates 
that implementing S. 1419 would cost $192 million over the 2015 
2019 period, assuming appropriation of the authorized amounts.
    CBO estimates that authorizing FERC to issue licenses for 
pilot projects to test marine and hydrokinetic technologies 
would have no significant net impact on the federal budget. CBO 
anticipates that issuing such licenses would affect FERC's 
workload; however, because FERC recovers 100 percent of its 
costs through user fees, any change in that agency's costs 
(which are controlled through annual appropriation acts) would 
be offset by an equal change in fees that the commission 
charges, resulting in no net change in federal spending.
    Pay-As-You-Go considerations: None.
    Intergovernmental and private-sector impact: S. 1419 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Megan Carroll; Impact 
on state, local, and tribal governments: Jon Sperl; Impact on 
the private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1419.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1419, as ordered reported.

                   Congressionally Directed Spending

    S. 1419, as reported, does not contain any congressionally 
directed spending items, limited tax benefits, or limited 
tariff benefits as defined in rule XLIV of the Standing Rules 
of the Senate.

                        Executive Communications

    The testimony provided by Mike Carr, Senior Advisor to the 
Director, Energy Policy and Systems Analysis and Principal 
Deputy Assistant Secretary, Office of Energy Efficiency and 
Renewable Energy, Department of Energy, and John Katz, Deputy 
Associate General Counsel for Energy Projects, Federal Energy 
Regulatory Commission, at the February 27, 2014, Subcommittee 
on Water and Power hearing on S. 1419 follows:

Written Statement of Mike Carr, Senior Advisor to the Director, Energy 
 Policy and Systems Analysis and Principal Deputy Assistant Secretary, 
 Office of Energy Efficiency and Renewable Energy, Department of Energy

                              introduction

    Chairman Schatz, Ranking Member Lee, and members of the 
Subcommittee, thank you for the opportunity to testify on 
behalf of the U.S. Department of Energy (DOE) on S. 1419, the 
Marine and Hydrokinetic Renewable Energy Act of 2013.
    The Department is still reviewing S. 1419 and therefore 
does not have a position on the bill at this time. S. 1419 
would authorize the Department to perform research and 
development on marine and hydrokinetic (MHK) technology 
components, materials, and systems in order to improve 
performance, increase survivability, and drive down the 
technology's cost. S. 1419 would authorize the Department to 
develop appropriate testing infrastructure and support 
demonstrations of MHK energy technologies to verify their 
performance and cost. The legislation also would expand the 
authorized role of National Marine Renewable Energy Research, 
Development, and Demonstration Centers to include in-water 
testing and demonstration of MHK technologies.

                               background

    DOE is pursuing an all-of-the-above approach to developing 
every source of American energy. The Office of Energy 
Efficiency and Renewable Energy leads DOE's efforts to help 
build a strong clean energy economy, a strategy that is aimed 
at reducing our reliance on oil, saving families and businesses 
money, creating jobs, and reducing pollution. We support 
research, development, and demonstration (RD&D) of cutting-edge 
technologies in sustainable transportation, energy efficiency, 
and renewable electricity generation, including both hydropower 
and MHK technologies. The Department supports the goals of 
ensuring United States leadership in innovating, validating, 
and manufacturing MHK technologies domestically, as well as 
deploying these technologies sustainably in order to harness 
the energy potential of our various water resources while 
building a clean energy economy.
    The Water Power Program has recently completed 
comprehensive resource assessments that identify the potential 
of the nation's waves, as well as tidal, ocean, and river 
currents. These resource assessments estimate that the 
technically extractable resource potential is almost 900 TWh/yr 
for wave energy\1\ and under 400 TWh/yr for tidal\2\ and ocean 
current,\3\ which represents up to 25 percent of projected U.S. 
generation needs by 2050. With more than 50 percent of the 
population living within 50 miles of coastlines, there is 
significant potential to provide clean, renewable electricity 
to communities and cities in these coastal regions using marine 
and hydrokinetic technologies. MHK technologies can more 
readily compete in the near term in coastal regions with higher 
average electricity prices, and close proximity of coastal 
populations to water resources reduces transmission distances. 
There are potentially many different ways that we can 
sustainably develop our water resources for energy and the 
Department is committed to helping identify new opportunities 
for developing renewable energy resources.
---------------------------------------------------------------------------
    \1\Reprocessed at 100 meter depth data from P. Jacobson, G. 
Hagerman, and G. Scott, ``Mapping and Assessment of the United States 
Ocean Wave Energy Resource,'' Electric Power Research Institute, Report 
Number 1024637, 2011.
    \2\K. Haas, H. Fritz, S. French, B. Smith, and V. Neary, 
``Assessment of Energy Production Potential from Tidal Streams in the 
United States,'' Georgia Tech Research Corporation, 2011 Upper bound 
derives from variation on assumptions in numerical models used.
    \3\K. Haas, H. Fritz, S. French, and V. Neary, ``Assessment of 
Energy Production Potential from Ocean Currents Along the United States 
Coastlines,'' Georgia Tech Research Corporation, 2013 Upper bound 
derives from variation on assumptions in the numerical models used, and 
represents Gulistream from FL to NC.
---------------------------------------------------------------------------
    Since DOE restarted its Water Power Program in fiscal year 
2008, the Program has made significant strides in advancing 
next-generation water power technologies that can extract 
energy from moving water, including waves and currents in 
oceans, rivers, and tidal areas; assessing existing resources; 
promoting deployment opportunities; and developing this 
resource in an environmentally responsible manner.
    Fostering a domestic MHK industry requires strategic 
investments in research, development, testing, and 
demonstration to drive down the cost and improve the 
performance of the most promising and cost-competitive 
technologies. The Department plans to invest $41.3 million in 
fiscal year 2014 to promote MHK technology development and 
testing in laboratory and open-water settings, while gathering 
the operational, environmental, and cost data needed to 
accelerate the responsible deployment and commercialization of 
MHK technologies.
    Furthermore, like all energy development, MHK deployment 
requires ensuring that our water, ecological, and marine life 
resources are protected. I will address these broad areas in 
turn.

                        research and development

    The levelized cost of energy (LCOE) of today's wave energy 
devices is between 61 and 77 cents per kilowatt-hour (0/kWh), 
and is between 47 and 53 0/kWh for tidal stream energy 
devices.\4\ The MHK subprogram goal is to achieve cost-
competitiveness at local coastal hurdle rates, which is 
approximately 12 to 15 0/kWh by 2030. The Program has developed 
detailed cost models for six different MHK device designs using 
performance simulations and small-scale laboratory tests for 
validation. To build on these cost models and clearly identify 
cost reduction pathways, the Program is identifying research 
and development opportunities to reduce the LCOE for MHK 
devices, supporting a detailed, internal techno-economic 
assessment of MHK technologies and helping stakeholders 
identify research and development gaps to achieve cost-
competitive energy rates by 2030. Using data from internal 
techno-economic MHK assessment, the Department has established 
baseline costs for the technology to better inform MHK RD&D 
activities.
---------------------------------------------------------------------------
    \4\``The Carbon Trust, Accelerating Marine Energy,'' July 2011: 
http:\\www/carbontrust.com/resources/reports/technology/accelerating-
marine-energy.
---------------------------------------------------------------------------
    Research activities enable the development of innovative 
technologies and improve the reliability and technology 
readiness of MHK systems. DOE currently supports systems and 
performance advancement projects to develop new drivetrain, 
generator and structural components as well as develop software 
that predicts ocean conditions and adjusts device settings 
accordingly to optimize power production. One example includes 
innovative components with cross-platform applicability, such 
as simplified drivetrain designs that will eliminate costly and 
unreliable gearboxes and hydraulics by utilizing permanent 
magnet and linear direct-drive generators. DOE also researches 
ways to improve the technology's survivability, like innovative 
corrosion resistant materials, such as composites, which can 
lower repairs and reduce operations and maintenance costs.

                       testing and demonstration

    DOE has invested in three National Marine Renewable Energy 
Centers. These Centers are geographically diverse, offering 
testing sites for a wide range of MHK technology types in 
different water conditions and climates, to help validate 
technology performance and identify and address technology 
deficiencies early in the development cycle. Recently, the 
Northwest National Marine Renewable Energy Center, led jointly 
by Oregon State University and the University of Washington, 
launched the Ocean Sentinel, a mobile instrumentation buoy to 
support ocean testing that obtains critical technical and cost 
performance data for a variety of wave energy technologies.
    Additionally, the Water Power Program is focused on making 
strategic investments in transformative technologies, including 
systems demonstration for advanced MHK industry projects like 
wave energy converter technologies. By supporting in-water 
demonstrations, the Program will have the opportunity to 
evaluate the entire process from demonstration inception to 
completion, validating construction, generation, and operating 
expenses and informing the investor community on the status and 
progress of MHK systems. Between fiscal year 2011 and fiscal 
year 2013, the Program cost-shared the testing of 10 MHK 
devices in open-water environments, and the testing of 8 MHK 
devices in test tanks in controlled conditions. These 
demonstrations have greatly increased our knowledge and 
understanding of device performance and their interaction with 
the environment. This important demonstration work helps to 
advance the commercial readiness of full-scale MHK 
technologies, like the first-ever grid-connected tidal power 
device in the United States in Cobscook Bay, Maine, now 
delivering enough electricity to the utility grid to alone 
power 25 to 30 homes annually.

                  developing mhk resources sustainably

    EERE's MHK subprogram pursues market acceleration and 
deployment activities that address key environmental and 
ecological uncertainties, which DOE believes currently 
represent the most significant barrier to rapid and efficient 
permitting and licensing of new demonstrations or commercial 
projects. In fiscal year 2014, DOE plans to invest $5 million 
in activities that support a range of environmental studies and 
tool development to ensure that energy generated from MHK is 
not only renewable, but environmentally sustainable. This 
includes the development of instrumentation, associated 
processing tools, and integration of instrumentation packages 
for quickly and cost-effectively conducting environmental 
monitoring of MHK technologies. Additionally, DOE is an active 
member of the International Energy Agency's Ocean Energy 
Systems group and recently collaborated with international 
partners to create the Tethys database, which catalogues and 
shares environmental research and monitoring information from 
around the world to enable sustainable development and 
expansion of clean, renewable ocean and offshore wind power. 
For the past four years, DOE has also served as the convener of 
the Federal Renewable Ocean Energy Working Group to discuss 
issues of importance, including environmental considerations, 
amongst relevant federal agencies.

                               conclusion

    In conclusion, I would like to thank you for the 
opportunity to testify on S. 1419 and on DOE's work to advance 
MHK technologies. The Department's goals are to help build a 
viable domestic MHK industry and secure a supply of efficient 
clean energy from our water resources by supporting innovations 
enabling cutting-edge MHK technology, testing and demonstration 
of these technologies, and tools and analysis to ensure we 
develop our marine and hydrokinetic resources sustainably. I 
look forward to working with this Subcommittee and with 
Congress to ensure United States leadership in this industry 
and to enable the deployment of this source of clean energy.

                        Testimony of John Katz,

    Deputy Associate General Counsel,
    Federal Energy Regulatory Commission
    Chairman Schatz, Ranking Member Lee, and Members of the 
Subcommittee:
    My name is John Katz, Deputy Associate General Counsel for 
Energy Projects, Federal Energy Regulatory Commission. I 
appreciate the opportunity to appear before you to discuss S. 
1419, the Marine and Hydrokinetic Renewable Energy Act. As a 
member of the Commission's staff, the views I express in this 
testimony are my own, and not necessarily those of the Chairman 
or of any individual Commissioner.

                             i. background

    Pursuant to Part I of the Federal Power Act (FPA), the 
Federal Energy Regulatory Commission authorizes and regulates 
non-federal hydropower projects. FPA section 4(e) provides that 
the Commission may issue licenses for hydropower project works 
located across, along, from, or in any of the streams over 
which Congress has jurisdiction under its commerce clause 
authority, and on any part of the public lands and reservations 
of the United States. FPA section 23(b) makes it unlawful (with 
exceptions not relevant here) for any person, state, or 
municipality, for the purpose of developing electric power, to 
construct hydropower project works on the navigable waters of 
the United States, on non-navigable waters over which Congress 
has Commerce Clause jurisdiction, on public lands or 
reservations, or using surplus water or power from any 
government dam, except pursuant to a license issued by the 
Commission.
    Under the FPA, the Commission regulates over 1,600 
hydropower projects at over 2,500 dams. Together, these 
projects represent 54 gigawatts of hydropower capacity, more 
than halt' of all the hydropower in the United-States. 
Hydropower is an essential part of the Nation's energy mix and 
offers the benefits of an emission-free, renewable, domestic 
energy source with public and private capacity together 
totaling about nine percent of the U.S. electric generation 
capacity.
    During the last decade, there has been increasing interest 
in developing projects using new technology that produces 
electricity utilizing waves or the flow of water in ocean 
currents, tides, or inland waterways. These are referred to as 
marine and hydrokinetic projects. By early 2007, the Commission 
had received more than 50 applications for preliminary permits 
to study such projects, and had held a technical conference 
with respect to the development of these new technologies. The 
Commission then issued an interim policy statement with respect 
to its review of marine and hydrokinetic preliminary permit 
applications.
    In 2008, Commission staff issued guidance on licensing 
marine and hydrokinetic pilot projects. The guidance discussed 
the issuance, under the Commission's existing authority and 
regulations, of five-year pilot licenses to enable developers 
to study and test new technology. Pilot project licenses would 
be for projects that were small, short-term, not located in 
environmentally sensitive areas, would be able to be shut down 
on short notice, and would be removed at the end of the pilot 
license term, unless a new license was granted at that time. 
Applicants would be required to consult with affected federal, 
state, and local resource agencies, Indian tribes, non-
govemmental agencies, and members of the public.
    Since the issuance of the Commission policy statement and 
staff guidance, Commission staff has worked closely with 
project developers and other stakeholders to explore the 
development of marine and hydrokinetic projects. There are 
currently 11 preliminary permits in effect for marine and 
hydrokinetic projects. To date, the Commission has licensed six 
marine and hydrokinetic projects, three of which were pilot 
projects, and is reviewing one application for a pilot tidal 
project.

                              ii. s. 1419

    Section 102 of S. 1419 provides that the Secretary of 
Energy, in consultation with the Secretary of the Interior, the 
Secretary of Commerce, and the Commission, shall carry out a 
program of research, development, demonstration, and commercial 
application to expand marine and hydrokinetic renewable energy 
production. While the Commission is not authorized or funded to 
engage in research, development, or commercial application 
activities, Commission staff is prepared to assist the 
Secretary, as appropriate, in these matters.
    Section 103 of S. 1419 provides for the development, under 
the Secretary of Energy, of national marine renewable energy 
research, development, and demonstration centers. Commission 
staff has discussed such centers with staff at the Department 
of Energy and believes that the centers could provide important 
support for the development of marine and hydrokinetic 
technology. Because the FPA requires that projects developed by 
private entities, states, and municipalities that are located 
in the navigable waters be licensed by the Commission, 
Commission staff believes that a regime in which the test 
centers would be owned by the Department of Energy would be 
preferable, so that testing would not require Commission 
authorization.
    Section 201 of S. 1419 would amend the FPA to authorize the 
Commission to issue pilot project licenses under specified 
criteria. As noted, the Commission has already issued pilot 
project licenses and Commission staff has developed guidance 
with respect to such licenses, under the assumption that the 
FPA currently provides authority for the Commission to do so. 
No entity has to date suggested that these actions are beyond 
the scope of the FPA. However, it is up to Congress to 
determine whether the Commission should be provided with 
explicit statutory authority in this area. To the extent that 
section 201 establishes criteria for qualifying pilot projects, 
Commission staff recommends that project developers and other 
stakeholders be given the opportunity to present their views on 
these matters. In addition, Commission staff recommends 
providing some flexibility in the criteria, given the unlcnowns 
in developing a new industry.
    I would be pleased to answer any questions you may have.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 1419, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

              ENERGY INDEPENDENCE AND SECURITY ACT OF 2007

PUBLIC LAW 110 140

           *       *       *       *       *       *       *

TITLE VI--ACCELERATED RESEARCH AND DEVELOPMENT

           *       *       *       *       *       *       *

   Subtitle C--Marine and Hydrokinetic Renewable Energy Technologies

SEC. 631. SHORT TITLE.

    This subtitle may be cited as the ``Marine and Hydrokinetic 
Renewable Energy Research and Development Act''.

           *       *       *       *       *       *       *

SEC. 632. DEFINITION.

    For purposes of this subtitle, the term ``marine and 
hydrokinetic renewable energy'' means [electrical] energy 
from--
          (1) waves, tides and currents in oceans, estuaries, 
        and tidal areas;
          (2) free flowing water in rivers, lakes, and streams;
          (3) free flowing water in man-made channels; and
          (4) differentials in ocean temperature (ocean thermal 
        energy conversion).

           *       *       *       *       *       *       *

SEC. 633. MARINE AND HYDROKINETIC RENEWABLE ENERGY RESEARCH AND 
                    DEVELOPMENT.

    [(a)In General.--The Secretary, in consultation with the 
Secretary of the Interior and the Secretary of Commerce, acting 
through the Under Secretary of Commerce for Oceans and 
Atmosphere, shall establish a program of research, development, 
demonstration, and commercial application to expand marine and 
hydrokinetic renewable energy production, including programs 
to--
          [(1) study and compare existing marine and 
        hydrokinetic renewable energy technologies;
          [(2) research, develop, and demonstrate marine and 
        hydrokinetic renewable energy systems and technologies;
          [(3) reduce the manufacturing and operation costs of 
        marine and hydrokinetic renewable energy technologies;
          [(4) investigate efficient and reliable integration 
        with the utility grid and intermittency issues;
          [(5) advance wave forecasting technologies;
          [(6) conduct experimental and numerical modeling for 
        optimization of marine energy conversion devices and 
        arrays;
          [(7) increase the reliability and survivability of 
        marine and hydrokinetic renewable energy technologies, 
        including development of corrosive-resistant materials;
          [(8) identify, in conjunction with the Secretary of 
        Commerce, acting through the Under Secretary of 
        Commerce for Oceans and Atmosphere, and other Federal 
        agencies as appropriate, the potential environmental 
        impacts, including potential impacts on fisheries and 
        other marine resources, of marine and hydrokinetic 
        renewable energy technologies, measures to prevent 
        adverse impacts, and technologies and other means 
        available for monitoring and determining environmental 
        impacts;
          [(9) identify, in conjunction with the Secretary of 
        the Department in which the United States Coast Guard 
        is operating, acting through the Commandant of the 
        United States Coast Guard, the potential navigational 
        impacts of marine and hydrokinetic renewable energy 
        technologies and measures to prevent adverse impacts on 
        navigation;
          [(10) develop power measurement standards for marine 
        and hydrokinetic renewable energy;
          [(11) develop identification standards for marine and 
        hydrokinetic renewable energy devices;
          [(12) address standards development, demonstration, 
        and technology transfer for advanced systems 
        engineering and system integration methods to identify 
        critical interfaces;
          [(13) identifying opportunities for cross 
        fertilization and development of economies of scale 
        between other renewable sources and marine and 
        hydrokinetic renewable energy sources; and
          [(14) providing public information and opportunity 
        for public comment concerning all technologies.
    [(b) Report.--Not later than 18 months after the date of 
enactment of this Act, the Secretary, in conjunction with the 
Secretary of Commerce, acting through the Undersecretary of 
Commerce for Oceans and Atmosphere, and the Secretary of the 
Interior, shall provide to the Congress a report that 
addresses--
          [(1) the potential environmental impacts, including 
        impacts to fisheries and marine resources, of marine 
        and hydrokinetic renewable energy technologies;
          [(2) options to prevent adverse environmental 
        impacts;
          [(3) the potential role of monitoring and adaptive 
        management in identifying and addressing any adverse 
        environmental impacts; and
          [(4) the necessary components of such an adaptive 
        management program.]
    The Secretary, in consultation with the Secretary of the 
Interior, the Secretary of Commerce, and the Federal Energy 
Regulatory Commission, shall carry out a program of research, 
development, demonstration, and commercial application to 
accelerate the introduction of marine and hydrokinetic 
renewable energy production into the United States energy 
supply, giving priority to fostering accelerated research, 
development, and commercialization of technology, including 
programs--
    (1) to assist technology development to improve the 
components, processes, and systems used for power generation 
from marine and hydrokinetic renewable energy resources;
    (2) to establish critical testing infrastructure 
necessary--
          (A) to cost effectively and efficiently test and 
        prove marine and hydrokinetic renewable energy devices; 
        and
          (B) to accelerate the technological readiness and 
        commercialization of those devices;
    (3) to support efforts to increase the efficiency of energy 
conversion, lower the cost, increase the use, improve the 
reliability, and demonstrate the applicability of marine and 
hydrokinetic renewable energy technologies by participating in 
demonstration projects;
    (4) to investigate variability issues and the efficient and 
reliable integration of marine and hydrokinetic renewable 
energy with the utility grid;
    (5) to identify and study critical short- and long-term 
needs to create a sustainable marine and hydrokinetic renewable 
energy supply chain based in the United States;
    (6) to increase the reliability and survivability of marine 
and hydrokinetic renewable energy technologies;
    (7) to verify the performance, reliability, 
maintainability, and cost of new marine and hydrokinetic 
renewable energy device designs and system components in an 
operating environment;
    (8) to coordinate and avoid duplication of activities 
across programs of the Department and other applicable Federal 
agencies, including National Laboratories and to coordinate 
public-private collaboration in all programs under this 
section;
    (9) to identify opportunities for joint research and 
development programs and development of economies of scale 
between--
          (A) marine and hydrokinetic renewable energy 
        technologies; and
          (B) other renewable energy and fossil energy 
        programs, offshore oil and gas production activities, 
        and activities of the Department of Defense; and
    (10) to support in-water technology development with 
international partners using existing cooperative procedures 
(including memoranda of understanding)--
          (A) to allow cooperative funding and other support of 
        value to be exchanged and leveraged; and
          (B) to encourage the participation of international 
        research centers and companies within the United States 
        and the participation of United States research centers 
        and companies in international projects.

SEC. 634. NATIONAL MARINE RENEWABLE ENERGY RESEARCH, DEVELOPMENT, AND 
                    DEMONSTRATION CENTERS.

           *       *       *       *       *       *       *

    [(b) Purposes.--The Centers shall advance research, 
development, demonstration, and commercial application of 
marine renewable energy, and shall serve as an information 
clearinghouse for the marine renewable energy industry, 
collecting and disseminating information on best practices in 
all areas related to developing and managing enhanced marine 
renewable energy systems resources.]
    (b) Purposes.--A Center (in coordination with the 
Department and National Laboratories) shall--
          (1) advance research, development, demonstration, and 
        commercial application of marine and hydrokinetic 
        renewable energy technologies;
          (2) support in-water testing and demonstration of 
        marine and hydrokinetic renewable energy technologies, 
        including facilities capable of testing--
                  (A) marine and hydrokinetic renewable energy 
                systems of various technology readiness levels 
                and scales;
                  (B) a variety of technologies in multiple 
                test berths at a single location; and
                  (C) arrays of technology devices; and
          (3) serve as information clearinghouses for the 
        marine and hydrokinetic renewable energy industry by 
        collecting and disseminating information on best 
        practices in all areas relating to developing and 
        managing marine and hydrokinetic renewable energy 
        resources and energy systems.

           *       *       *       *       *       *       *

SEC. 636. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary to 
carry out this subtitle $50,000,000 for each of the fiscal 
years [2008 through 2012] 2015 through 2018, except that no 
funds shall be appropriated under this section for activities 
that are receiving funds under section 931(a)(2)(E)(i) of the 
Energy Policy Act of 2005 (42 U.S.C. 16231(a)(2)(E)(i)).

           *       *       *       *       *       *       *

FEDERAL POWER ACT

           *       *       *       *       *       *       *

PART I

           *       *       *       *       *       *       *

SEC. 34. PILOT LICENSE FOR MARINE AND HYDROKINETIC RENEWABLE ENERGY 
                    PROJECTS.

    (a) Definition of Hydrokinetic Pilot Project.--
          (1) In general.--In this section, the term 
        ``hydrokinetic pilot project'' means a facility that 
        generates energy from--
                  (A) waves, tides, or currents in an ocean, 
                estuary, or tidal area; or
                  (B) free-flowing water in a river, lake, or 
                stream.
          (2) Exclusions.--The term ``hydrokinetic pilot 
        project'' does not include a project that uses a dam or 
        other impoundment for electric power purposes.
    (b) Pilot Licenses Authorized.--The Commission may issue a 
pilot license to construct, operate, and maintain a 
hydrokinetic pilot project that meets the criteria listed in 
subsection (c).
    (c) License Criteria.--The Commission may issue a pilot 
license for a hydrokinetic pilot project if the project--
          (1) will have an installed capacity of not more than 
        10 megawatts;
          (2) is for a term of not more than 10 years;
          (3) will not cause a significant adverse 
        environmental impact or interfere with navigation;
          (4) is removable and can shut down on reasonable 
        notice in the event of a significant adverse safety, 
        navigation, or environmental impact;
          (5) can be removed, and the site can be restored, by 
        the end of the license term, unless the project has 
        obtained a new license or the Commission has 
        determined, based on substantial evidence, that the 
        project should not be removed because it would be 
        preferable for environmental or other reasons not to; 
        and
          (6) is primarily for the purpose of--
                  (A) testing new hydrokinetic technologies, 
                both single devices and in arrays of devices;
                  (B) locating appropriate sites for new 
                hydrokinetic technologies; or
                  (C) determining the environmental and other 
                effects of a hydrokinetic technology.
    (d) Lead Agency.--In carrying out this section, the 
Commission shall act as the lead agency--
          (1) to coordinate all applicable Federal 
        authorizations; and
          (2) to comply with the National Environmental Policy 
        Act of 1969 (42 U.S.C. 4321 et seq.).
    (e) Schedule Goals.--
          (1) In general.--Not later than 30 days after the 
        date on which the Commission receives a completed 
        application, and following consultation with Federal, 
        State, and local agencies with jurisdiction over the 
        hydrokinetic pilot project, the Commission shall 
        develop and issue pilot license approval process 
        scheduling goals that cover all Federal, State, and 
        local permits required by law.
          (2) Compliance.--Applicable Federal, State, and local 
        agencies shall comply with the goals established under 
        paragraph (1) to the maximum extent practicable, 
        consistent with applicable law.
          (3) 1-year goal.--It shall be the goal of the 
        Commission and the other applicable agencies to 
        complete the pilot license process by not later than 1 
        year after the date on which the Commission receives 
        the completed application.
    (f) Size Limitation.--For proposed projects located in an 
estuary, tidal area, river, lake, or stream, the Commission 
shall determine the size limit on a case-by-case basis, taking 
into account all relevant factors.
    (g) Extensions Authorized.--On application by a project, 
the Commission may make a 1-time extension of a pilot license 
for a term not to exceed 5 years.

           *       *       *       *       *       *       *
```