Obama nominee faces tough questions from GOP senators

Source: Hannah Northey, E&E reporter • Posted: Wednesday, May 21, 2014

Norman Bay, President Obama’s pick to lead the Federal Energy Regulatory Commission, faced sharp criticism today from Republicans on the Senate Energy and Natural Resources Committee bristling over enforcement complaints.

But Bay also appeared to have found critical allies on the panel of 12 Democrats and 10 Republicans.Ranking member Lisa Murkowski (R-Alaska) asked Bay, a former New Mexico prosecutor, to address recent criticism that FERC’s Office of Enforcement — which Bay has led since 2009 — has handed out excessive fines.

Bay, known for overseeing recent multibillion-dollar settlements with Wall Street giants like JPMorgan Chase & Co., rejected the allegations, saying FERC’s enforcement activities are transparent and FERC commissioners must sign off on all significant actions the office takes. He was addressing charges outlined by William Scherman, FERC’s former general counsel and a partner with Gibson, Dunn & Crutcher LLP, in a Monday op-ed inĀ The Wall Street Journal.

“When the Office of Enforcement engages in significant action, it does so at the direction and with the authorization of the commission,” Bay said.

Bay also vowed to be fair if confirmed as chairman. “You have to have the commitment to do the right thing,” Bay told members of the Senate Energy and Natural Resources Committee at his confirmation hearing. “You have to have a commitment to fairness, because fairness has to be a cornerstone of your office.”

But Murkowski said that the criticism of FERC being raised in the op-ed as well as by a Pennsylvania-based hedge fund, Powhatan Energy Fund LLC, appears to be more widespread than just a group of “disgruntled” market participants — and that the concerns reflect poorly on the agency and FERC’s enforcement division. “I would suggest this is a problem for us,” Murkowski said.

Murkowski also joined Sen. John Barrasso (R-Wyo.) in questioning Obama’s choice to appoint Bay to the position of chairman instead of FERC acting Chairwoman Cheryl LaFleur, who is up for another five-year term at the agency. Barrasso asked why LaFleur should be “demoted.”

“You’d have to ask the White House that particular question,” Bay told Barrasso, adding that he’d like to think the administration considered his long work history.

Despite the Republican backlash, Bay appears to have backing among many Democrats. One Republican even acknowledged he could be confirmed.

“I assume you’re going to be confirmed,” said Sen. Rob Portman (R-Ohio).

Sen. Mary Landrieu, the panel’s Democratic chairwoman from Louisiana, said Bay was obviously qualified.

“A gentleman with his background expertise and degrees is just absolutely qualified and meets the standard of trying to be a fair and objective in his views, clearly he is qualified,” Landrieu told reporters after the hearing. “The question that arose today was whether FERC, as the commission, not Mr. Bay himself … is being as fair in their enforcement cases in terms of releasing information in a timely and expeditious way.”

Landrieu said Murkowski raised good points and FERC’s enforcement may be open to improvement but said it’s unclear whether the Senate panel will hold a hearing on the issue. “Our staff may be able to do that work with the minority staff to really explore whether the FERC process should be improved,” she said.

Sen. Martin Heinrich (D-N.M.), who offered warm remarks and support for Bay as the hearing opened, referring to the op-ed said there could be an element of “sour grapes” by some market participants over past enforcement actions.

Upon questioning from Sen. Maria Cantwell (D-Wash.), LaFleur said she had not substantially dissented on any of FERC’s enforcement settlements but did dissent on a few procedural issues and orders for companies to show their innocence. LaFleur also said that the area of enforcement is somewhat new and that debate about applying the rules is to be expected.

Reliability issues were front and center for one key Democratic supporter of Bay.

Sen. Joe Manchin (D-W.Va.) asked Bay how he would assess the effects of U.S. EPA’s implementation of new carbon-curbing federal rules and ensure grid reliability is maintained. The issue is a hot topic of Manchin’s coal-rich home state.

“Reliability has to be job one,” Bay said. “As I review the draft rulemaking, I will be looking, if confirmed, to try to assess what the reliability impacts are and what FERC can do” with input from EPA, states, grid overseers and industry to ensure sufficient planning.

Bipartisan support

Former Senate Energy and Natural Resources Chairman Pete Domenici (R-N.M.) introduced Bay, calling him an “excellent nominee” who needed “little verbiage.” Domenici noted that he, as the “old” senator from New Mexico, was joining the panel’s two current lawmakers from the Land of Enchantment.

“He typifies the American dream, he’s the son of Chinese immigrants,” Domenici said, hailing Bay’s education and experience. “As I look at it, he’s done everything right that would entitle to try this job on, to see if he’ll do as well as all the other things he’s done.”

Landrieu also submitted a letter for the record from former Sen. Jeff Bingaman (D-N.M.) and New Mexico Gov. Susana Martinez (R) in support of Bay. Martinez applauded Bay for working closely with state officials and enforcing the law in an “even-handed manner,” Landrieu said.

But Domenici expressed “great concern” that a story line is “being planted by some that [Bay] is not fair,” something the former senator said he did not find anywhere in Bay’s background.

As for senators who choose to oppose Bay, Domenici said that’s “their prerogative,” while adding the government is lucky to have such a candidate. “The question is how he might do over time,” Domenici said.

Bay, a native of New Mexico, in prepared testimony vowed to be “fair, balanced, and pragmatic in addressing issues” that come before the commission and to “decide cases on the merits based on the facts and the law.

“And to be consensus oriented because the most stable policies command the broadest support and because regulatory certainty is critical to market participants when they make huge capital investment decisions,” he said.

Bay also said he would focus on FERC’s role in permitting and promoting gas and electric transmission infrastructure, for which there is an “important need,” as well as ensuring grid reliability.

He also said he would look for ways to improve market efficiency, adding that FERC “must continue to be a vigilant cop on the beat.”

Under Bay’s watch as enforcement director, the agency has issued 49 settlements — 48 reached by unanimous vote. Every market manipulation settlement, he noted, has been issued with a unanimous vote. “These settlements have helped protect consumers, ensure the integrity of the markets, and provide a level playing field for all market participants,” he said.

Bay also provided details about his personal life, saying he is “proud to call myself a New Mexican,” a state blessed with an abundance of sun, wind, oil and gas — and a “real life example of an ‘all-of-the-above’ approach to energy.”

Bay said he is a son of Chinese immigrants who came to the United States after World War II in search of a better life, higher education and freedom. His father worked for the U.S. Air Force; his mother was a researcher at the Energy Department.

Bay also offered details about his past — painting a picture of bipartisanship, noting that he clerked for a Republican federal judge, worked at the State Department during the Reagan administration and began working at the Justice Department in the first Bush administration.

“I’ve spent my life in public service, with a bipartisan commitment to good government,” Bay said.