UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Chapter I 

(Docket No. RM07-08-000) 

Preliminary Permits for Wave, Current, and Instream New Technology 

 Hydropower Projects 

 

(February 15, 2007) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Inquiry (NOI) and Interim Statement of Policy. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is inviting 

comments on its procedures with respect to the treatment of preliminary permits under 

Part I of the Federal Power Act for wave, current, and instream new technology 

hydropower projects. 

DATES: Comments on this NOI are due on [insert date 60 days after publication in 

the FEDERAL REGISTER]. 

ADDRESSES: You may submit comments identified by Docket No. RM07-8-000, by 

one of the following methods: 

• Agency Web Site: http://ferc.gov. Follow the instructions for submitting 

comments via the eFiling link found in the Comment Procedures Section of the 

preamble. 

• Mail: Commenters unable to file comments electronically must mail or hand 
deliver an original and 14 copies of their comments to the Federal Energy 

Regulatory Commission, Office of the Secretary, 888 First Street, N.E., 

Washington, D.C. 20426. Please refer to the Comment Procedures Section of 

the preamble for additional information on how to file paper comments. 

FOR FURTHER INFORMATION CONTACT: 

William Guey-Lee 

Office of Energy Projects 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6064 

Merrill Hathaway 

(Legal Information) 

Office of General Counsel – Energy Projects 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502- 8825 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Preliminary Permits for Wave, Current, and Docket No. RM07-8-000 

Instream New Technology Hydropower Projects 

NOTICE OF INQUIRY AND INTERIM STATEMENT OF POLICY 

(February 15, 2007) 

Introduction

1. The Federal Energy Regulatory Commission (Commission) is issuing this Notice 

of Inquiry to seek comments on how it should treat applications for preliminary permits 

to study hydropower projects involving proposals to utilize wave, current, and instream 

new technology methods to develop hydropower.1

 The Commission is also seeking 

comments on how it should oversee any such permits during their terms. Finally, the 

Commission also sets an interim policy pending the outcome of this proceeding.

2. The Commission has seen increasing interest in new hydroelectric technologies 

that would utilize ocean waves, tides, and currents from free-flowing rivers, as evidenced 

by a surge in applications for preliminary permits to study such projects. Commission 

staff has issued 11 preliminary permits for projects of this type; three are for proposed 

 1

 There are a variety of technologies in various stages of development to produce 

electric power using ocean currents, tides, and wave action, rather than the traditional 

hydropower model involving hydraulic head developed by use of a dam or other 

diversion structure. For purposes of this notice of inquiry, the Commission refers to these 

newer forms of technology as “wave, current, and instream new technology” or simply 

“new technology.” However, the Commission is using the terms as shorthand, and is not 

attempting to define or limit the scope of these technologies. 
Docket No. RM07-8-000 - 2 -

tidal energy projects (in New York, Washington, and California), and eight are for 

proposed ocean current energy projects (off the coast of Florida). Over 40 preliminary 

permit applications for ocean projects are currently pending before the Commission, all 

of which have been filed since March 2006. 

3. These new technologies have significant potential: it has been estimated that the 

potential for wave and current power could be over 350-terawatt hours per year, which 

would more than double current hydropower production.2

 The Commission anticipates 

further exploration of how these technologies can fit within the national energy 

infrastructure in terms of the amount of potential energy that can be developed, its 

reliability, environmental and safety implications, and its commercial viability. The 

Commission wants to reduce regulatory barriers to the development of new technologies, 

where possible, and has exhibited the maximum flexibility permitted by law in regulating 

these projects.3

 

Background

4. Under Part I of the Federal Power Act (FPA),4

 the Commission regulates nonfederal hydropower projects that are: located on navigable waters; located on 

 2

 See Hydroelectric Infrastructure Technical Conference, Docket No. AD06-13-

000 (December 6, 2006), transcript at 12; 22 (testimony of George Hagerman). 

3

 For example, in Verdant, Power, LLC, 111 FERC ¶ 61,024, on reh’g, 112 FERC 

¶ 61, 143 (2005), the Commission concluded that, under specified circumstances, the 

short-term testing of new hydropower technology would not require a Commission 

license. 

4

 16 U.S.C. §§ 791a, et seq. (2000). 
Docket No. RM07-8-000 - 3 -

nonnavigable waters over which Congress has Commerce Clause jurisdiction, were 

constructed after 1935, and affect the interests of interstate or foreign commerce; located 

on public lands or reservations of the United States; or use surplus water or water power 

from a federal dam. The Commission has construed the term “navigable water” to 

include waters off the U.S. coast.5

 

5. Section 4(f) of the FPA6

 authorizes the Commission to issue preliminary permits 

for the purpose of enabling prospective applicants for a hydropower license to secure the 

data and perform the acts required by FPA section 9,7

 which in turn sets forth the material 

that must accompany an application for license. FPA section 58

 states: 

Each preliminary permit issued under this part shall be for the sole purpose 

of maintaining priority of application for a license under the terms of this 

Act for such period or periods, not exceeding a total of three years, as in the 

discretion of the Commission may be necessary for making examinations 

and surveys, for preparing maps, plans, specifications, and estimates, and 

for making financial arrangements. Each permit shall set forth the 

conditions under which priority shall be maintained. Such permits shall not 

be transferable, and may be canceled by order of the Commission upon 

failure of permittees to comply with the conditions thereof or for other good 

cause shown after notice and opportunity for hearing.[9

] 

 5

 See AquaEnergy Group, LTD., 102 FERC ¶ 61,242 (2003). 

6

 16 U.S.C. § 797(f) (2000). 

7

 16 U.S.C. § 802 (2000). 

8

 16 U.S.C. § 798 (2000). 

9

 Nothing in the FPA requires the Commission to issue a preliminary permit; 

whether to do so is a matter solely within the Commission’s discretion. 
Docket No. RM07-8-000 - 4 -

Thus, the purpose of a preliminary permit is to preserve the right of the permit holder to 

have the first priority in applying for a license for the project that is being studied.10 

Because a permit is issued only to allow the permit holder to investigate the feasibility of 

a project, and grants no land-disturbing or other property rights,11 the Commission 

historically has generally liberally granted such permits without requiring an extensive 

showing by the applicant.12 

6. In contrast, a license issued by the Commission gives the licensee the authority to 

construct and operate a project. Standard license Article 5 require licensees to acquire 

title in fee or the right to use in perpetuity all lands, other than lands of the United States, 

necessary or appropriate for the construction, maintenance, and operation of a project. 

Where licensees cannot obtain such rights through contract, they may use eminent 

domain to do so.13 In consequence, before issuing any license, the Commission conducts 

a full, searching public interest inquiry, and the licensing process is completely distinct 

from the permit process. 

 10 See, e.g., Mt. Hope Waterpower Project LLP, 116 FERC ¶ 61,232 at P 4 (2006) 

(“The purpose of a preliminary permit is to encourage hydroelectric development by 

affording its holder priority of application (i.e., guaranteed first-to-file status) with 

respect to the filing of development applications for the affected site”). 

11 Thus, a permit holder can only enter lands it does not own with the permission 

of the landholder, and is required to obtain whatever environmental permits federal, state, 

and local authorities may require before conducting any studies. 

12 See, e.g., Three Mile Falls Hydro, LLC, 102 FERC ¶ 61,301 at P 6 (2003); see 

also Town of Summersville, W.Va. v. FERC, 780 F.2d 1034 (D.C. Cir. 1986) (discussing 

nature of preliminary permits). 

13 See FPA section 21, 16 U.S.C. § 814 (2000). 
Docket No. RM07-8-000 - 5 -

7. A permit holder is not required to file a license application. Likewise, a developer 

may study a project without holding a preliminary permit. However, the holding of a 

permit does give a developer first-in-time preference over any competitors who file 

applications for projects at the same site, during the permit term. As noted above, it is 

only if and when a project license is issued that the licensee can, under the conditions 

imposed in the license, engage in ground-disturbing activities, and if necessary use 

eminent domain to acquire lands for the project. 

8. The Commission has begun to receive preliminary permit applications for 

proposed projects that would produce electric power through innovative technologies that 

would take advantage of various types of water movement, including ocean wave action 

and tides and currents both offshore and in rivers. In the last two years, the Commission 

has granted permits to study projects off the coast of Florida,14 in San Francisco Bay,15 

in the East River of New York,16 and in Puget Sound, Washington.17 Approximately 

45 additional applications of this type are pending. 

 14 Red Circle Systems Corporation, 110 FERC ¶ 62,113 (2005); Red Circle 

Systems Corporation, 110 FERC ¶ 62,114 (2005); Red Circle Systems Corporation, 

110 FERC ¶ 62,115 (2005); Red Circle Systems Corporation, 110 FERC ¶ 62,116 

(2005); Red Circle Systems Corporation, 110 FERC ¶ 62,117 (2005); Florida Hydro, 

Inc., 110 FERC ¶ 62,270 (2005); Red Circle Systems Corporation, 110 FERC ¶ 62,271 

(2005); Red Circle Systems Corporation, 110 FERC ¶ 62,272 (2005). 

15 Golden Gate Energy Company, 113 FERC ¶ 62,028 (2005). 

16 Verdant Power, LLC, 113 FERC ¶ 62,193 (2005). 

17 Tacoma Power, 114 FERC ¶ 62,174 (2006). 
Docket No. RM07-8-000 - 6 -

9. On December 6, 2006, the Commission held a technical conference with respect to 

the new technologies.18 At the conference, and in comments subsequently filed by 

interested entities, the Commission heard a wide variety of ideas regarding the 

preliminary permit program, ranging from statements that the current program works well 

for new technologies,19 to suggestions that the Commission shorten the typical three-year 

preliminary permit period to 18 months,20 to comments that the Commission should 

adopt a much stricter policy with respect to the issuance of preliminary permits for new 

technology projects, in order to prevent site-banking (the reservation of potential sites 

without the current intent to develop a project).21 This diversity of opinion suggested that 

it would be useful for us to conduct a public inquiry into this subject, to determine if the 

Commission should in any way change the manner in which it treats preliminary permits 

for new technology projects. 

The Subject of the Notice of Inquiry

10. The Commission seeks comment on the standard of review it should apply to 

applications for preliminary permits for ocean wave, tidal, and other non-traditional 

hydropower projects, and how it should regulate those permits during their terms. We 

outline below three alternatives, and encourage comments on these approaches, as well as 

 18 Hydroelectric Infrastructure Technical Conference, Docket No. AD06-13-000. 

19 See Comments of Oceania Energy Company (filed December 20, 2006). 

20 See Comments of Ocean Renewable Energy Coalition (filed December 20, 

2006). 

21 See Comments of Gil Sperling, Verdant Power, LLC (technical conference 

transcript at 106-07). 
Docket No. RM07-8-000 - 7 -

the suggestion of any other methods that commenters believe would be fruitful in 

encouraging and appropriately regulating the initial exploration of new technology 

projects. 

11. We received comments at and following the technical conference concerning the 

possibility of creating new or modified procedures for the licensing process for new 

technology projects. We recognize that this issue is complex, given that there are many 

requirements governing hydropower licensing that are established by law and that an 

examination of this issue has implications extending to small traditional hydropower 

projects, as well as those involving new technology. Moreover, we are aware that our 

staff, with a view towards simplifying and shortening the licensing process where 

possible, has been able to recommend waiver of certain aspects of the process and to 

expeditiously process license applications where the applicant has: (a) chosen a site that 

minimizes environmental impacts, (b) built consensus among stakeholders (including the 

local community and state and federal resource agencies) regarding project issues and 

appropriate environmental measures, and (c) provided the Commission with all necessary 

information. 22 Such streamlined procedures may be applicable to some new technology 

projects. Given that we recently received the first license application for this type of 

project, we are not prepared at this time to decide if these or other procedures can be 

applied generally to new technology projects in a manner consistent with law and sound 

 22 See F & B Wood Corporation, 117 FERC ¶ 62,059 (2006); Birch Power 

Company, 116 FERC ¶ 62,075 (2006); Birch Power Company, 116 FERC ¶ 61,074 

(2006); Wade Jacobson, 116 FERC ¶ 62,073 (2006). 
Docket No. RM07-8-000 - 8 -

policy. However, we will be monitoring new technology proceedings, and as these 

proceedings evolve, we may consider whether alterations to our process may be 

appropriate generically or in individual cases. In addition, the Commission will hold a 

technical conference on this issue at a future date. 

A. Maintain Standard Preliminary Permit Approach

12. As noted, traditionally, the Commission has not subjected most preliminary permit 

applications to extensive scrutiny. Further, the Commission has not often exercised the 

right it reserves in all preliminary permits to cancel the permit. 

13. Continuing to follow this approach could provide some regulatory protection for 

developing and testing new technology, could prevent “claim jumping,” that is, 

interference with a prospective applicant’s ability to investigate the feasibility of a 

project, and may provide some modest facilitation for financing new projects. On the 

other hand, this approach would do nothing to resolve the concern we have seen 

expressed that an entity could site-bank by filing for a number of new technology projects 

that it has no real intent of developing. It also would not resolve the question, raised in 

some pending permit proceedings, of how to properly set the boundaries of the area 

reserved for study by a preliminary permit holder. While it is typically easy to determine 

the boundaries of a traditional, riverine hydropower project, we have heard contrasting 

suggestions that establishing strict boundaries for a new technology project would 

artificially restrict the potential scope of such a project and that allowing too wide 

boundaries in such cases would encourage site-banking, to the possible detriment of 

competition in project development. 
Docket No. RM07-8-000 - 9 -

B. Stricter Scrutiny Approach

14. In the alternative, the Commission could process new technology preliminary 

permit applications with a view toward limiting the boundaries of the permits, to prevent 

site-banking and to promote competition. Further, to ensure that permit holders are 

actively pursuing project exploration, the Commission would carefully scrutinize the 

reports that permit holders are required to file on a semi-annual basis,23 and would, where 

sufficient progress was not shown, consider canceling the permit. Stricter scrutiny could 

entail requirements such as reports on public outreach and agency consultation, 

development of study plans, and deadlines for filing a notice of intent to file a license 

application and a preliminary application document. This approach could reduce sitebanking, providing a disincentive for developers to seek permits for projects that they are 

not ready to pursue. By limiting the geographic scope of permits, we may encourage 

more thoughtful development of permit applications, as well as competition. On the 

negative side, this approach could, if not carefully administered, make it more difficult 

for even well-intentioned and prepared applicants to obtain multiple permits. It also 

could require additional Commission resources to be devoted to the permit program, both 

in more carefully examining applications, and in giving stricter scrutiny to progress 

reports. 

 23 As a standard condition in all preliminary permits, the Commission requires the 

permit holder to file progress reports every six months. 
Docket No. RM07-8-000 - 10 -

C. Decline to Issue Preliminary Permits for New Technology Projects 

15. As a third alternative, the Commission could decide, as a matter of policy, not to 

issue preliminary permits for new technology hydropower projects. In this case, all 

potential license applicants would have equal opportunities to explore the development of 

new technology projects, and the Commission would resolve any resultant competition 

during the licensing phase. This procedure would resolve concerns about site banking 

during the permit stage, because no entity would have priority with respect to a project 

site until an application was actually filed. Moreover, the Commission’s regulatory 

authority would not be invoked, and its resources not utilized, until an entity had 

demonstrated the seriousness of its interest in a project by filing an application. This 

would leave the market free to explore potential projects, without the possibly artificial 

constraints imposed by the existence of a preliminary permit held by an entity that lacks 

the capacity, or does not have a serious intent, to develop a project. On the negative side, 

potential applicants would not have the guarantee of first-to-file priority while they 

explored potential projects. To the extent that a preliminary permit provides some 

assistance in obtaining financing, this aid would no longer be available. 

Interim Statement of Policy

16. On balance, the Commission has decided to follow the “strict scrutiny” approach 

during the pendency of this proceeding, because this appears to respond to a significant 

number of the issues that have been raised at the technical conference and in individual 

proceedings, particularly with respect to site-banking and the scope of proposed projects. 

However, we have not in any way decided whether we will ultimately select one of the 
Docket No. RM07-8-000 - 11 -

three alternatives set forth in this notice of inquiry, and perhaps may choose some other 

approach. We will determine how to proceed only after the Commission has had the 

opportunity to review and consider the comments filed in response to this notice. 

Procedure for Comments 

17. The Commission invites interested persons to submit comments, and other 

information on the matters, issues and specific questions identified in this notice. 

Comments are due on or before [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER]. Comments must refer to Docket No. RM07-8-000, and must 

include the commenters’ name, the organization they represent, if applicable, and their 

address. 

18. Commenters are requested to use appropriate headings and to double space their 

comments. 

19. Comments may be filed on paper or electronically via the eFiling link on the 

Commission's web site at http://www.ferc.gov. The Commission accepts most standard 

word processing formats and commenters may attach additional files with supporting 

information in certain other file formats. Commenters filing electronically do not need to 

make a paper filing. Commenters that are not able to file comments electronically must 

send an original and 14 copies of their comments to: Federal Energy Regulatory 

Commission, Office of the Secretary, 888 First Street N.E., Washington, D.C. 20426. 

20. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 
Docket No. RM07-8-000 - 12 -

below. Commenters are not required to serve copies of their comments on other 

commenters. 

Document Availability 

21. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission's Home Page 

(http://www.ferc.gov) and in the Commission's Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington, D.C. 20426. 

22. From the Commission's Home Page on the Internet, this information is available in 

the Commission's document management system, eLibrary. The full text of this 

document is available on eLibrary in PDF and Microsoft Word format for viewing, 

printing, and/or downloading. To access this document in eLibrary, type the docket 

number (excluding the last three digits) in the docket number field. 

23. User assistance is available for eLibrary and the Commission's website during 

normal business hours. For assistance, please contact the Commission’s Online Support 

at 1-866-208-3676 (toll free) or 202-502-6652 (e-mail at FERCOnlineSupport@ferc.gov) 

or the Public Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at 

public.referenceroom@ferc.gov). 

By direction of the Commission. 

( S E A L ) 

 Magalie R. Salas, 

 Secretary