On November 30, 2020, the US Senate voted to confirm the nominations of two Commissioners to the Federal Energy Regulatory Commission (FERC). The appointments of Mark Christie (Republican) and Allison Clements (Democratic) bring the regulatory agency to its full capacity of five commissioners.
Full quorum returns to FERC
For the first time in several years, all five sitting Commissioner slots at FERC will be occupied. As is custom, the balance tilts to the party of the presidential administration — following the two confirmations, FERC is now comprised of three Republican and two Democratic commissioners, respectively. However, many industry observers expect that President-elect Joe Biden will appoint a Democratic commissioner as chairman early in his term, thereby shifting the priorities and broad approach of the agency for the upcoming four years.
Mark Christie, the Republican addition to FERC, brings significant experience in the utility regulation space. Most notably, he served as chairman of the Virginia State Corporation Commission (VSCC) for three consecutive terms over a 16-year span. As such, Christie will likely bring a state-oriented philosophy to FERC, which is grappling with many issues pertaining to federal versus state jurisdiction as well as emerging state-level policies incentivizing renewable energy generation and climate goals. During his years at the VSCC, Christie commonly exercised a rule-of-law philosophy and rebuffed judicial activism; however, he recently sided with renewable interests in approving an offshore wind proposal and rejecting an expansive utility plan to ostensibly modernize the grid, which Christie argued would unduly burden ratepayers with excessive costs.
Allison Clements, the Democratic counterpart, has established herself as a prominent clean energy leader stemming from experience as founder of Goodgrid, LLC, an energy consulting firm, as well as a decade spent at the Natural Resources Defense Council (NRDC). Clements worked as senior attorney and director for the Sustainable FERC project at NRDC, which largely focused on implementation of the Federal Power Act (FPA) and other legal instruments that bolstered renewable energy development in the US. Prior to her time at NRDC, Clements practiced law as a regulatory and transactional attorney.
The pairing of two commissioners in a bipartisan fashion may have helped expedite the confirmation process during a time of competing governmental priorities and the "normal" upheaval associated with a presidential transition. The Trump administration originally nominated Christie and Clements on July 27, 2020. Following a nomination hearing on September 17, 2020 before the Senate Energy and Natural Resources Committee, it was not assured that the appointments would be brought before the full Senate for a vote prior to inauguration in January.
Tumult at the top
Approximately a month ago, President Trump removed Neil Chatterjee from his post as chairman (the longest-serving member of FERC, holding office since August 8, 2017). James Danly, the other sitting Republican commissioner, was named chairman in a somewhat unexpected and abrupt shift in leadership. During his term as chairman, Chatterjee had presided over an array of consequential policy decisions and issued key orders affecting all resources in the US energy markets and facilitated a modern tack to agency actions and rulemaking.
Initially considered an ally to coal country (due to his political experience under Senate majority leader Mitch McConnell of Kentucky), Chatterjee methodically carved out a unique space at FERC. Early in his term, FERC contemplated — and ultimately rejected — a mandate from the US Department of Energy (DOE) seeking to help the flagging domestic coal and nuclear sectors under the guise of resilience and power grid reliability. Following that overt attempt to blunt the trend of coal and nuclear unit retirements, Chatterjee voted to solicit specific information from regional grid operators relating to resilience matters rather than a top-down agency directive.
During his run as chairman, Chatterjee oversaw the issuance of two landmark orders:
- Order No. 841, guidance requiring regional grid operators to accommodate and ascribe appropriate economic value to electric storage resources and the range of services it provides
- Order No. 2222, enabling the aggregation of distributed energy resources from small installations of intermittent generation into wholesale markets
Both orders signaled that FERC is looking toward a future in which domestic power markets integrate significant proportions of renewable energy resources and storage products.
Most recently, Chatterjee proposed a policy statement clarifying agency jurisdiction over wholesale market rules that would incorporate state-determined carbon prices as well as prompting regional grid operators to analyze potential outcomes and benefits relating to carbon pricing regimes. This policy statement, issued on October 15, 2020, did not memorialize any specific new rule or regulation, but demonstrated that Chatterjee was amenable to the concept of carbon pricing as a market mechanism in order to achieve broad domestic climate change goals. The policy statement framed any potential market design proposals subject to FERC jurisdiction under the FPA and did not confer any predetermined bias toward any approach. Nonetheless, only weeks after helming this policy statement, Chatterjee was relieved of his duties as chairman by the Trump administration. Many industry observers — and Chatterjee himself — attribute the reshuffling at FERC to actions FERC took on carbon pricing, perceived by some as a public alignment with Democratic interests and not the result of FERC-deliberated proceedings.
On November 5, 2020, James Danly, the former general counsel of FERC and appointed as Commissioner on March 30, 2020, was named chairman by President Trump. Danly acted to convey a return to administration priorities by promptly cancelling a forthcoming roundtable discussion on electric vehicles (originally arranged by Chatterjee). Further, Danly did not conduct a press briefing following the November open meeting, bucking a long-held tradition of the FERC chairmanship.
Outlook going forward
Upon his inauguration in January, President-elect Biden is widely expected to promote Richard Glick to chairman. Glick, the now-senior Democratic member of FERC, has been a stalwart for renewable energy interests and a critic of agency rulings considered adversarial to state-level policy initiatives. A number of bubbling issues will come to the fore over the next few years, including but not limited to: downstream emissions impacts and environmental review of natural gas pipeline infrastructure, grid reliability in areas of high renewable penetration (e.g., the California blackouts earlier this year), and procedural matters relating to agency practice of issuing tolling orders for projects, which implicates landowner interests and even contentious eminent domain matters.
Finally, the power dynamic is likely to swing in favor of the Democrats in 2021, when the Biden administration can nominate a Democratic commissioner to replace Chatterjee upon the expiration of his term on June 30, 2021. In the meantime, FERC continues to evolve at a brisk pace with no shortage of defining issues to deliberate over.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2020 White & Case LLP