What's Up With the Finavera License: My Play by Play Predictions

I've handled more than two dozen appeals, several with great success, before the venerable D.C. Circuit, so I know my way around the court. But like most appellate lawyers, I'm loathe to try to predict the outcome of D.C. Circuit cases and wind up looking foolish when I'm (inevitably) wrong. Nevertheless, I'm willing to make some predictions about the State of Washington's petition for review of FERC's order issuing a license to Finavera for the Makah Project (docketed as State of Washington Dept. of Ecology v. FERC
No. 08-1191 (D.C. Cir. filed 5/15/2008) because I've seen some misconceptions about the issues in the case online and because I think it's a fairly easy call that Finavera keeps the license. (Full disclosure - years ago, I worked on a matter for AquaEnergy unrelated to this appeal and I now hold stock in Finavera). My detailed analysis follows after the jump.

My regular readers know that I've followed the Finavera saga at this blog for a long time. Back in December 2007, FERC issued a conditioned license for Finavera's proposed 1 MW Makah Bay Pilot Project, to be located off the coast of Clallam County, Washinton. FERC conditioned the license, and any construction activities thereunder on Finavera's receipt of a Coastal Zone Management Act (CZMA) consistency finding and a Section 401 Clean Water Act (CWA) water quality certificate from the applicable Washington state offices.

In January 2008, the Washington Department of Ecology filed a timely rehearing request of FERC's license, arguing that FERC was precluded from issuing a license until the CZMA and CWA certificates issued. Subsequently, the state issued a CZMA and CWA Section 401 certification in February 2008. FERC incorporated the conditions contained in the CZMA and CWA into the Finavera license and dismissed the rehearing request as moot, since the license now included the certifications that the state had argued were a prerequisite to issuing the license.

Once FERC decides a matter on rehearing, a party must go to federal circuit court to obtain further review. The Washington Department of Ecology took this step, filing a petition for review with the D.C. Circuit. According to Ecology's Press Release, the petition asks the court to clarify that federal law does not allow FERC to offer a conditioned license in advance of an applicant obtaining required statutory certifications under the CZMA or CWA.

Ecology faces a couple of hurdles with its appeal. First, in order to have standing to challenge a FERC order, a party must show that it's been aggrieved, or harmed by the rulig. Federal appellate courts, and the D.C. Circuit in particular, are sticklers for standing -- rightly so because it's an Article III constitutional requirement. Where a party lacks standing, a federal circuit court correspondingly lacks jurisdiction and will - well, actually, must toss the suit. As I see this case, Ecology is not directly aggrieved by FERC's order issuing the license. The final Finavera license contains all of the requirements in both the CZMA and CWA certificates that Ecology eventually issued. From the court's perspective, no harm means no foul...and no standing.

Now, Ecology might argue that while it's not aggrieved in this case, the court must, nevertheless examine the merits because otherwise FERC's policy of issuing conditional licenses will forever evade review. That's a stronger argument, but I'm still betting that the court doesn't buy it. First, based on this record, we don't know whether FERC will ever again have occasion to issue conditional licenses because after this case, some developers may simply decline a conditional license and hold out for a final license. Indeed, as I've explained here, I have some doubts about whether conditional licenses really increase certainty for developers as FERC had hoped and even if they do, that benefit comes at the cost of antagonizing even previously cooperative state agencies. Second, the "capable of repetition" doctrine applies only where the complaining party will again face aggrievement as a result of the same action. I'm not presently aware of any pending license applications that involve the Washington state Ecology Department, at least in the near future.

Finally, even assuming a scenario where the court addresses the merits and finds that FERC violated the law by issuing a conditional license, what's the relief? Vacate the license and send it back for FERC to incorporate the CZMA and CWA provisions that are already in the license to begin with? Don't think so. Ultimately, win or lose by Ecology, Finavera's Makah license remains intact. Wish I could say the same for my reputation if I get this one wrong!