Chatterjee Downplays Quorum Concerns; Lists Priorities on PURPA, Resilience, Pipelines

This article appears as published in Foster Report No. 3264

FERC Chairman Neil Chatterjee on September 4 downplayed concerns about the Commission being at three members following the departure of Cheryl LaFleur at the end of August, insisting that FERC can tackle challenges before it with the commissioners in place.

At the bare minimum of three for a quorum, the recusal of one commissioner would result in a lack of quorum and no action in a proceeding. But because LaFleur provided sufficient notice of her exit and FERC staff prioritized items to be issued while she was there, Chatterjee expressed confidence that FERC can address questions before it with the three commissioners.

He spoke at an event hosted by Resources for the Future, with questions from RFF President and CEO Richard Newell and the audience. Chatterjee also spoke with reporters afterwards.

In both settings, he mentioned some priorities he hopes to address in the coming weeks and months, along with policy preferences and the dynamics of having three commissioners and two vacancies to be filled by the White House and the Senate confirmation process. He told Newell FERC would welcome a speedy nomination and confirmation process, but his time working in the Senate helps him understand such items can take a long time.

He offered no insights to reporters who asked whether he has heard anything from the White House or Senate on when a nomination might come or whether there would be a package of two nominees, to fill the vacancy for a Republican and Democrat or Independent commissioner.

Chatterjee mentioned several items pending before the Commission that he hopes to address, some of which were launched under former Chairman Kevin McIntyre, such as a review of the natural gas pipeline certificate policy statement, whether changes can be made on implementation of the Public Utility Regulatory Policies Act (PURPA) and the power grid resilience proceeding that stemmed from a notice of proposed rulemaking (NOPR) forwarded by the Department of Energy (DOE). Other efforts he mentioned include incentives for power grid transmission investments, staffing for a Houston office of the Commission to handle LNG export project reviews, and addressing landowner concerns while pipeline certificate orders are pending on rehearing but considered final to allow construction to begin.

Because Republican Commissioner Bernard McNamee worked on the NOPR while he was at DOE before his nomination to FERC, many FERC observers expect him to recuse himself from any decision addressing grid resilience in the open docket (AD18-7). The resilience proceeding is a separate case and may not warrant a recusal, but McNamee has been steering clear of ruling on items tied to his previous work at DOE and in the private sector, with plenty of recusals in different cases.

Chatterjee told reporters that LaFleur provided enough notice on her departure and worked with FERC staff on items she wanted to get out before leaving that he does not expect quorum concerns to crop up. While recusal decisions are up to the individual commissioners, “I’m confident looking at the docket before us that we will not have any recusal issues on any of the significant matters, or other matters we have, going forward,” he said. “We’re pretty well clear on our recusal situation,” he said.

Chatterjee repeated his view that for items like a policy statement, it is best to have a full complement of five commissioners and a unanimous decision. But for other items, “I’m confident that we can move forward with the group that we have.”

Commissioner Richard Glick, a Democrat, has dissented on many pipeline certificate approvals based on his disagreement with the Commission’s analysis of greenhouse gas emissions associated with pipelines. Some sort of reconciliation among the three commissioners within a policy statement would be difficult, but it is not out of the realm of possibilities, Chatterjee said.

As he has in the past, Chatterjee told Newell that he cringes at the notion that FERC has become more political. He emphasized that the orders issued since McIntyre’s health concerns prevented him from voting – by necessity with a 2-2 split among Republicans and Democrats – have been bipartisan, with different voting blocs among them. LaFleur supported orders on pipeline and LNG export projects in tandem with Chatterjee and McNamee, and McNamee dissented on an energy storage case based on his support for states’ rights, with the two Democrats joining Chatterjee in the majority, he said.

People should not read into any 2-1 decision that it is the result of politics, he told Newell. There are some real differences in interpretation of the law among the three commissioners, and those differences will play out in some orders. LaFleur was willing to negotiate on some matters, and “my fear is that without her there, if we fall on a 2-1 divide the simple narrative is that FERC is being political again,” when that is not the case.

Addressing reporters, he had similar comments that there will be matters in the coming weeks and months where votes may be 2-1. “But none of this is being driven by a calculation that we were going to gain a majority at a certain point. We vote on items when they’re ready, when we have the votes to secure them.”

For the regulated community affected by FERC decisions, the ultimate arbiter of the Commission’s work is the court system, and “my focus is on securing votes on orders that will withstand legal scrutiny,” Chatterjee told Newell. A dissent from a commissioner can make an order stronger because the order has to address the sentiments of the dissenting commissioner. He said he will measure the success or failure of the Commission by if it is producing orders that withstand judicial scrutiny.

In one of the recent gas pipeline orders that was upheld by the U.S. Court of Appeals for the D.C. Circuit, Judge Patricia Millett wrote an 18-page concurring statement criticizing the use of tolling orders that leaves landowners in “a bureaucratic purgatory that only Dante could love,”  because a FERC certificate order is not considered final for legal appeals but enables construction to begin.[1]

The use of tolling orders, which grant rehearing solely for the purpose of further consideration, essentially buys time for FERC to issue a final order that can be judicially reviewed. By acting within 30 days of a rehearing request, as directed by Congress — since not doing so would automatically deny rehearing – FERC can delay a determination on rehearing as a final order, which Millett said the courts should put an end to in practice.

In the review of the certificate policy statement and in addressing a question about the court case with reporters, Chatterjee said he is sensitive to the concerns of landowners who are affected by pipeline construction. “Our use of tolling orders isn’t nefarious,” since 30 days is a short amount of time to consider rehearing requests, he said. Chatterjee understands the consternation of landowners caught in the legal limbo and he is open to seeing if there can be some type of relief provided.

“It’s something that I want to discuss with colleagues and take a serious look at,” he told reporters. In her statement, Millett included some suggestions for ways to address the issue. Chatterjee declined to offer any specifics on what type of relief he thinks FERC should consider.

Chatterjee’s schedule has him in Houston September 5, speaking at the Petroleum Club of Houston at an event closed to media. He spoke with reporters about plans for a Houston office of the Commission to review LNG export project applications. While FERC staff in Washington, D.C., has done a great job and personnel has been added to handle the voluminous applications, having an office in Houston, where some of the engineering schools are nearby and other expertise is readily available, should prove beneficial.

He views a staff of about eight to be in Houston, following a rigorous hiring process, and he emphasized that an office there should not be taken as an indication that FERC will be “rubber stamping” approval of LNG export projects.

Among the challenges for commissioners and staff in the past several years has been the interplay between state energy policy decisions and the effect on organized wholesale power markets. An open proceeding in PJM Interconnection is being closely watched and Chatterjee did not address it specifically, referring to comments by others that a ruling could signal the fate of capacity markets in other independent system operators (ISOs).

Chatterjee said he believes in states’ rights and making their own resource decisions regarding power generation, but sometimes those decisions have implications in other states and affect the functions of the wholesale market. Those decisions create challenges for ISOs and FERC. He referred to ISO New England’s Competitive Auctions with Sponsored Policy Resources effort and Western states’ Energy Imbalance Market solutions where stakeholders came together and found a balance between state decisions and wholesale market operations.

FERC has to ensure that the wholesale markets function well, which can be difficult given the generation transitions taking place in different states.

Addressing PURPA implementation as the grid has added much more renewable resources than when the law was passed in 1978, and the grid resilience proceeding, are some of the items Chatterjee hopes to tackle. Defining the attributes of resilience and whether there is a threat to grid reliability are the first steps and such determinations need not be polarizing or partisan, Chatterjee said. He hopes to proceed with the case “in short order in a thoughtful and deliberative way.”

On PURPA, any major change would have to come from Congress, but there are steps FERC can take to make the 1978 law align more closely with current markets and the proliferation of renewable resources, he said. Renewable resources like wind and solar power “can stand on their own” and compete with other generation resources without government subsidies, and any reform efforts to modernize implementation of the law would not have a detrimental effect on renewable resources, Chatterjee said.

When asked what he’d like to see from Congress, Chatterjee noted that aside from the Energy Policy Act amendments of 2005, every major energy policy change from Congress has been through tax measures or appropriations bills. It has left a bit of a void on environmental policy and resulted in agencies such as FERC being pushed to address issues not clearly under their authority. He suggested Congress could “make energy policy boring again” and bridge some of the partisan divides that have cropped up in the current discussion on Capitol Hill. When energy policy was left to engineers and attorneys and was more out of the public eye, Congress was able to pass some laws that benefited consumers. Agencies like FERC should not be setting policy that is better left to the legislative branch, he said.

By Tom Tiernan ttiernan@fosterreport.com

[1]   For a past story, see, D.C. Circuit Upholds Atlantic Sunrise Approval; Judge Blasts Use of Tolling Orders, FR No. 3261, pp. 6-8.

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