First Wave Energy License in the U.S. Subject to Rehearing

I guess I spoke too soon in my original post blogging the Finavera conditional license where I implied that the FERC'ss issuance of the license represented an important step forward for marine renewables. Yes, it is an important step forward, but we'll have to step back first and wait. That's because both the Makah Tribe and the State of Washington Department of Ecology have filed rehearing requests of FERC's order issuing a conditional license to Finavera (links are to rehearing requests). And while the delay and uncertainty created by the rehearing requests is unfortunately, at the same time, both of the rehearing requests do raise important issues that need to be resolved at some point. Here's a quick summary of both pleadings, below the jump.

Washington State challenges the Commission's issuance of a conditional license without Finavera first having obtained a Section 401 WQC or a CZMA certification. The state argues that FERC cannot make a license condition on receipt of a Section 401 or CZMA certificate, but that the statute requires receipt of these certificates as a prerequisite to issuance of a license. The filing suggests that the state had intended to issue a CZMA certificate imminently and that Finavera had agreed to an extension. But apparently, FERC issued the conditional license anyway. As for the 401 certification, FERC has issued other licenses where a Section 401 WQC is under review in the state courts (and thus not final); making Section 401 a condition seems to be a logical outgrowth of an already established policy. From my perspective, it's hard to say who's right in this case; it's yet another turf war. Neither FERC nor any party disputes in this case that the developer must obtain a Section 401 and CZMA for a license to become final. Rather, this debate is really about timing, i.e., whether a developer must have the 401 and CZM certificates in hand before FERC can take any action, or whether FERC can resolve all of the other license issues and issue a license that remains non-final until the necessary 401 and CZM certificates are granted. A victory for the state, incidentally, would mean the end of FERC's conditional license program, so as I said at the outset, this is an issue that does require resolution.

The Makah rehearing raises an equally interesting issue. FERC's order found that the Olympia Coast National Sanctuary where the Makah project will be sited is a federal reservation. As such, NOAA, the agency that administers the reservation has the power to impose mandatory conditions on the license under Section 4(e) of the Federal Power Act. But the Makah argue that the sanctuary is not a reservation as defined by statute, because the the sanctuary encompasses state submerged lands, not federal property. The distinction here is critical because if the Sanctuary is not a federal reservation, NOAA would lose its authority to impose mandatory conditions in the license. In addition, the Makah Tribe also argues that because a sliver of the project is sited on the Makah reservation, that the tribe has approval over annual charges under the Federal Power Act.

It's interesting that the Tribe raised the Section 4(e) issue. Typically, project developers challenge Section 4(e) conditions because they are often more onerous than the developer would prefer. But here, Finavera did not seek rehearing of the license so presumably, it believes that it can live with the proposed conditions. And even the Tribe opposes only one of NOAA's 4(e) conditions -- the proposed "reopener clause" which would allow NOAA to impose additional conditions down the line. The Tribe itself has 4(e) thority because the project will be located on the Makah reservation; perhaps it seeks to ensure that its own mandatory conditioning authority is not diluted by other agencies such as NOAA exercising 4(e) authority.

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