The abrupt resignation and departure (effective February 3, 2017) of former FERC Chairman Norman Bay will leave the Commission without the minimum 3-commissioner quorum needed for the Commission to act. Regulated entities can expect a flurry of activity at the Commission this week, while Commissioner Bay is still voting. As a former FERC Chairman, I believe Acting Chairman Cheryl LaFleur, a Democrat, will do her best to conduct the agency’s business after Bay’s departure, but there are limits to what she and remaining Commissioner, Collette Honorable, can do.
The first order of business will be to move out major orders that are ready for decision. Four major natural gas pipelines have completed Environmental Impact Statements and await final authorization. Because many authorizations limit construction when migrator species are present at a project site, a delay in FERC action could result in many months of additional delay in construction. But these projects require complicated orders and, in some cases, further public comment, so issuance of final orders before Bay’s resignation takes effect may not be possible.
On the electric side, parties in New England are awaiting FERC’s decision on the ISO’s regional returns on equity for electric transmission, an expansion of which is sorely needed in the region.
Chairman LaFleur knows that FERC is not entirely disabled by these events. Staff works for the Chairman, and even without a quorum, FERC staff has considerable authority under delegations from the Commission to continue processing cases, including both litigated matters and paper proceedings, but it generally cannot take final action unless cases are uncontested or staff action is routine or procedural. Staff will be reticent to wade into any matters that could elicit controversy or court action, even if it is authorized to act on the merits of a project or a rate. Lack of a quorum raises at least one heretofore unanswered question: how can FERC staff exercise the final decisional authority of the Commission, using the delegations in the agency’s rules, at a time when the Commission itself lacks authority to act? To our knowledge no one has challenged any FERC staff action on those grounds, probably because this is the first time since 1993 that the agency has been without a quorum for any length of time.
During this hiatus in FERC action, new rate filings may be filed and those rates could go into effect by operation of the Natural Gas Act or Federal Power Act in the absence of Commission orders to suspend those rates and/or set them for hearing. In that case, FERC majority would later have the burden of demonstrating that those effective rates are not just and reasonable under the statutes and FERC precedent.
When will the White House and the Senate solve this problem with newly confirmed commissioners? To date, no FERC nominations have gone to Capitol Hill. When they do, FBI background checks, courtesy visits, a hearing or multiple hearings, and finally the necessary Committee and floor votes will stand between the nominees and a new quorum at 888 North First Street, NE. Optimistically, we may see a resolution by April or May.