FERC Gives the Green Light to Makah Pilot Wave Project

When we last checked in on the status of the the first ever conditional license issued by FERC for a wave energy project (Finavera's 1.4 MW, 4 buoy Makah Bay Offshore Wave Pilot), several parties had challenged FERC's decision. Two Washington state agencies argued that FERC lacked the power to issue a license without a Section 401 water quality certificate (WQC) and a Coastal Zone Management Act (CZMA) certification from the state authorizing the project. And the Makah Tribe challenged FERC's finding that the Olympia Coast Marine Sanctuary is a reservation which would give NOAA mandatory conditioning authority under Section 4(e) of the Federal Power Act.

Typically, FERC can take up to a year to resolve rehearing requests, but here, FERC resolved the parties' challenges in just two months with the issuance of this order. Accounting for FERC's quick action is the fact that the state agencies eventually issued a WQC and CZMA certification during the pendency of their appeal, thereby rendering their challenges moot.

By way of background, on December 21, 2007, FERC issued a conditional license for the Makah Pilot Wave Project. FERC stated that the license would become final only when Finavera, the licensee, received the required WQC and CZMA certifications from Washington State. On January 21, 2008, the state agencies sought rehearing of FERC's order, arguing that FERC was precluded from taking any action on the license until the state certifications issued. But on February 28, 2008, the Department of Ecology issued a CZMA certification and a WQC. FERC amended the conditional license to incorporate the terms and conditions contained in the CZMA certification and the WQC. Because the necessary certifications were issued, FERC found that the state's argument that the certifications are a prerequisite to license issuance were moot. Nevertheless, FERC maintained that its issuance of a conditioned license did not violate the CZMA or the CWA because FERC expressly provided that the license would not authorize any activity that would trigger the requirements of either of these statutes.

As to Makah's objections, FERC agreed that the submerged lands within the marine sanctuary where the project would be sited were not a reservation within the meaning of the Federal Power Act. FERC concluded that the state of Washington held title to the submerged lands, while the definition of reservation under the FPA required a federal ownership interest. Because the sanctuary lands are not a reservation, NOAA did not have the power to proposed mandatory conditions in the license under Section 4(e) of the FPA. In any event, FERC decided to adopt all but two of NOAA's measures, minimizing the impact of denying NOAA mandatory conditioning authority. However, now that FERC has concluded that the project lands are state owned, Finavera must obtain the right to use these state owned lands before it can construct the project.

FERC's incorporation of the state certifications and all but two of NOAA's proposed recommendations into the license makes it less likely that these entities will appeal the license. Still, even with a license issued (and assuming no appeals), it's unlikely that we'll see the project in the water anytime soon - in addition to obtaining authorization to use project lands, the license also requires Finavera to prepare and file a variety of plans for monitoring electronic magnetic fields (EMF) and water quality and preventing marine entanglement. And all of this will take time.