Without a quorum, what happens at FERC?

Source: By James P. Rubin, Politico • Posted: Monday, February 6, 2017

FERC’S FINAL COUNTDOWN: In a few hours, FERC will become a two-woman show after Commissioner Norman Bay departs at the end of the day. That will leave the commission without a quorum for the first time in its 40-year history. Bay’s decision to leave the agency so soon after having the chairman’s gavel taken from him by President Donald Trump has stirred the agency and left energy analysts, industry big wigs, lawyers, and lobbyists fretting over just how much work screeches to a halt. It’s been more than a week since Bay announced he’d leave, but the agency has churned slower on big natural gas pipeline certifications than industry had hoped for and shed little light on how it will operate over the next several weeks. Nevertheless, we saw some late-night orders and may see a flurry of last-minute activity today. Pencils down now, here’s what to watch for:Natural gas pipeline certifications are perhaps the most talked-about issue among industry types. And FERC stayed up late to deliver on some of those, including Energy Transfer Partners’ Rover and a pair of smaller pipeline projects like Tennessee Gas’ Orion and Dominion’s Charleston. Analysts had also thought Spectra’s NEXUS and National Fuel’s Northern Access 2016 might get approval so stay tuned. Mainstream legal thought maintains that commission leaders need to sign off on these kind of projects, so companies had hoped for approvals soon in order to meet springtime tree-clearing deadlines and other restrictions. Then, Massachusetts Sens. Ed Markey and Elizabeth Warren fired a warning shot over a pipeline project approved last week, raising concerns about the fairness of FERC’s rehearing process sans quorum.

A new “delegation” order also seems to be in the works at the agency. In 1993, FERC feared losing a quorum, prompting the sitting commissioners to issue an ordergranting additional powers to the senior staff the authority to suspend certain electric and gas rate issues. The commission never fell below three members then, but that order may be a model for how FERC proceeds now. “Certainly, we’ve reviewed that order, and we’re reviewing other matters here, and we recognize the press of our docket … and the needs of many stakeholders to hear from us,” FERC Commissioner Colette Honorable told ME. “The time frame is obviously beyond our control so we are attempting to put structures in place to allow us to continue and delegate authority to staff, as necessary, to get us through this period.” Honorable said she wasn’t sure whether FERC could hold its monthly meeting with two members. Still, it’s unclear what happens if certificates for contested interstate natural gas pipelines and electric rate filings are approved with just two commissioners or newly empowered staff so…

There’s a lot of Beltway chatter about how much FERC staff can do. Staff handles a lot of the agency business already but former FERC Chairman Jim Hoecker told ME it was unclear how much more they could do when the commission leadership itself didn’t have the authority to act without a quorum. “Are the actions taken under those delegations legally defensible?” Hoecker said. “I think there’s a big question there. I don’t know what the answer is but I think it’s not necessarily a slam dunk that the staff can go ahead.”

And the pipeline industry isn’t eager to test that — especially as FERC has faced intensifying protests in recent months from anti-fracking activists. “People can put out these theories about emergency authorities and things,” said Don Santa, CEO of the Interstate Natural Gas Association of America and a former FERC commissioner, but he went on to warn an industry crowd this week “how much the commission is under scrutiny from [environmental] groups and the litigiousness of those groups.”

Nuclear subsidies drama: FERC has two pending complaints from the Electric Power Supply Association for regulators into step into spring auctions in New Yorkand PJM because of state decisions to subsidize struggling nuclear plants. If FERC remains without a quorum into the spring, EPSA members could claim they’ve been harmed by FERC’s inaction. But the comment period for both cases only ended last month.

Trump has not announced a FERC nominee, and it’s an open question how high of a priority that is for the new president. So it could be several weeks — or months — until Bay’s empty seat is filled.