Week Ending June 11, 2021

Chatterjee Eyeing Options With Term Ending, No White House Nomination Forthcoming

This Article Appears as Published in Foster Report No 3353

Neil Chatterjee has “nothing lined up” for employment once his term as commissioner at FERC ends June 30, though he is talking to “a wide array of parties,” he said during a June 10 interview with The Foster Report.

Chatterjee offered guidance for a successor, praised Chairman Richard Glick for his handling of matters as the end of June approaches, acknowledged that his recusals on cases may increase due to an abundance of caution for not running afoul of ethics guidelines and expressed concern that his departure may leave the Commission with a deadlock 2-2 vote on some items if a FERC nominee is not named by the White House soon.

He has no departure date selected, and commissioners can stay in place after their terms expire until a replacement is confirmed by the Senate or the end of the Congressional session. He only recently ramped up the job search to be able to vote on some items important to him, such as the final policy statement on carbon pricing and Order No. 2222 to better enable power market participation from distributed energy resources.

When Chatterjee informed Glick and other commissioners of his preference to vote on those items that he shepherded during his time at FERC, Glick moved them up on the calendar for votes, along with return on equity matters for transmission facilities. Glick understood Chatterjee’s desire to vote on such items before the search for work in the private sector prevented him from participating on such items. “He’s to be commended for the manner in which he’s guided the Commission” since taking over as chairman as designated by President Joe Biden, Chatterjee said.

Biden has yet to announce an intent to nominate a replacement for Chatterjee, and concern is mounting that a FERC nominee may not be a priority within the Biden Administration.

“It’s discouraging that this isn’t higher on the priority list,” because “FERC is the fulcrum for the Biden administration’s climate agenda,” said Tyson Slocum, energy program director at Public Citizen. While names of possible replacements for Chatterjee are being floated around and vetting is likely being done for some individuals to gain Senate confirmation, there has not been a firm list or nominee to emerge from the White House, Slocum said June 9 in a brief interview.

The longer there is without a nomination, the more likely it is looking like a Democrat to fill Chatterjee’s seat may not be confirmed by the Senate until the fall. Depending on the Biden administration’s infrastructure package negotiations in Congress and efforts to appease progressive Democrats in the Senate, a FERC nominee could face a tougher confirmation road, depending on a nominee’s background and views on clean energy, sources said.

The White House “has played its potential list of nominees quite close to the proverbial vest,” added Christine Tezak of ClearView Energy Partners LLC. Tezak and ClearView compiled a list of officials that have been mentioned by sources as being considered for the FERC seat.

That list has eight individuals on it, most of whom have state regulatory experience, with four of those from the western part of the country. Those are Martha Guzman Aceves, commissioner with the California Public Utilities Commission, Megan Decker, chairman of the Oregon PUC, Anne Rendahl, commissioner at the Washington Utilities & Transportation Commission, who was an administrative law judge at the UTC before her role as commissioner, and Joshua Epel, past chairman of the Colorado PUC who is currently senior policy advisor for Renewables for Colorado and previously was chairman of the Colorado Oil and Gas Conservation Commission.

Others on the ClearView list include Willie Phillips, chairman of the District of Columbia Public Service Commission, who was an attorney with the North American Electric Reliability Corp. (NERC), Abigail Anthony, commissioner with the Rhode Island PUC, Tom Dalzell, an attorney who retired from the International Brotherhood of Electrical Workers union in California at the end of 2020, and Maria Duaime Robinson, a state lawmaker in Massachusetts who has experience as a staffer in Congress and past roles with Advanced Energy Economy and Navigant Consulting.

There probably are other individuals being considered for the FERC seat, but it is really surprising that the White House has not made a nomination more of a priority, said Slocum.

Chatterjee has recused on cases at FERC recently, including some involving natural gas pipelines and independent system operators in California and New England. He is consulting with FERC’s ethics office and approaching recusals very carefully. Because he is talking to multiple entities on future employment options, an interview with a law firm could generate multiple recusals involving that firm’s client base. If discussions with multiple law firms are in the picture “the recusals can add up,” he said.

More recusals from Chatterjee in the future present the possibility that there could be a 2-2 tie vote, and that is something Glick will have to manage as items are scheduled for votes. Commissioners often point to the vast majority of FERC votes that are bipartisan and not along party lines, though several big-ticket items result in votes more along party lines.

Chatterjee is a Republican, selected by former President Donald Trump after roles in the power sector and as energy policy advisor for Senate Minority Leader Mitch McConnell (R-Ky.). He has been at FERC since 2017. When he was demoted from the chairman role in November of 2020 for votes in support of carbon pricing, Order 2222 and items that were deemed too out-of-line with Republican leaders, he noted that he would be the “swing vote” at FERC, between Democrats’ clean energy agenda and Republican views.

Commissioner James Danly, a Republican, was chairman for a bit under three months at the end of the Trump administration, when he was named by Trump to replace Chatterjee. Danly and fellow Republican Mark Christie are at FERC, as Glick and Commissioner Allison Clements, both Democrats, provide the Commission with a 3-2 Republican majority under a Democrat president. That will flip to a 3-2 Democrat majority once a replacement for Chatterjee is seated.

Chatterjee noted that he has voted with Republican commissioners on some items and Democrats on others, with several instances of him being the decisive vote on FERC orders. With that dynamic, “part of me would like to stick around to ensure there is not a significant gap” between a departure and Senate confirmation of a replacement, he said. He is a bit worried that if he leaves when there is not more clarity on a White House nomination to replace him, it could leave FERC with a 2-2 deadlock on some key issues.

“I’d like to minimize that,” while also considering job opportunities to support his family, Chatterjee said. At the moment, he has recently stepped up the job hunting and is balancing that effort with a desire to protect against deadlock FERC votes. He referred to the song “One Last Time” from the musical Hamilton, where George Washington says people need to learn how to say goodbye.

The lack of a clear favorite to gain the nomination from the White House could be viewed several ways, Chatterjee said, adding that he has heard nothing from the Biden administration on timing or a possible replacement.

One view is that the administration has a lot of priorities higher than a lone FERC seat, and the White House views FERC functioning rather well with the current lineup. It is not often that a single vote at FERC is so critical, but if progressives want to push their agenda with a lot of 3-2 votes along party lines, there might be more of an impetus to get a nomination before the Senate soon, Chatterjee said.

If the White House is eyeing someone with a somewhat similar approach as Chatterjee, the need for a prompt nomination is lessened. Sen. Joe Manchin (D-W.Va.), who chairs the Senate Energy and Natural Resources Committee, has warned that too overt of a push for someone opposed to pipelines could face difficulties in the Senate confirmation process, Chatterjee said.

Another view on the lack of activity from the White House is that the people being vetted are keeping their mouths shut, which is smart.

Yet another view would be that a potential nominee has business ties or other interests that are complicating the paperwork, background checks and other steps before a nomination is announced. Some nominees are not well known in the rumor mill, and can come take people by surprise when the announcement is made. Energy industry folks trying to read the tea leaves on the nomination process can omit elements and be wrong, Chatterjee said.

Commenting on the list compiled by ClearView, Slocum said Public Citizen has worked with several of the state officials, and praised Guzman Aceves of California and Anthony of Rhode Island. “They’d make terrific FERC commissioners,” Slocum said. Both have economics and environmental experience in their background. Anthony has a PhD in Environmental and Natural Resource Economics from the University of Rhode Island after receiving a bachelor and a master’s degree in economics from the University of Montana. She was director of the Acadia Center’s grid modernization and utility reform initiative before being named to the PUC in 2017.

Guzman Aceves earned a master of science degree in agricultural and resource economics from the University of California, Davis and a bachelor of science in international economics from Georgetown University, according to her biography on the PUC website.

Phillips, as an African American, is among the potential nominees who would bring diversity to the commissioner ranks at FERC, along with expertise on grid security and reliability. He was assistant general counsel at NERC and was at law firm Van Ness Feldman LLP before being appointed to the PSC in 2014. He received his law degree from Howard University and bachelor of science degree from the University of Montevallo, in Alabama, according to his PSC biography.

The Biden White House has not made much progress filling open positions compared with previous presidential administrations, Tezak said. And with only a single vacancy looming at FERC, it is not clear when a nomination may come. Even with a nomination later this month, and a hearing before the Senate Energy and Natural Resources Committee before an August recess, “we would not be surprised if a confirmation vote slides into the fall,” she said.

That prospect was also referenced by Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. “It seems plausible that a new commissioner could be seated by September,” Peskoe said in a June 9 post on Twitter.

It is also possible, however, that the seat could go unfilled at the end of 2021 if the Biden White House does not act soon, Peskoe said. He referred to 2017 data showing that the average time between announcement of a nomination and Senate confirmation is more than 100 days, and said more recent nominees have had between 50 and 110 days between the nomination and Senate committee hearing.

Chatterjee and former Commissioner Robert Powelson had only 17 days between a White House nomination and Senate hearing, but that was when there was a lack of a quorum at FERC and filling the open seats were more of a priority.

Chatterjee hopes to participate in some key proceedings in the future, including steps to improve the transmission grid and perhaps refrain from reversing the minimum offer price rules (MOPR) for PJM Interconnection. The PJM capacity auction results were disclosed recently, with costs about $4 billion below the previous auction, providing savings to consumers. PJM officials said the MOPR imposed by FERC did not appear to have much effect.

The controversy associated with the MOPR is that the rules were set to increase prices for traditional resources and limit state efforts to promote clean energy, MOPR opponents have argued. Those opponents include Glick, who voted against those PJM orders and issued scathing dissenting statements about the effects of the MOPR. Those who voted in favor of the orders said they eliminate state subsidies.

Chatterjee, who voted in favor of the MOPR orders, maintained that he always said market participants should wait to see the auction results before jumping to fixed resource requirement options and exiting the capacity market. The MOPR “was viewed through political lenses and not market lenses” when the orders were debated at FERC. “I’m partially guilty of this,” he said.

But now that the auction results are known for next year’s prices in PJM, there should not be a big push to reverse course on the MOPR, Chatterjee said. Criticizing the orders was easy, and he hopes caution is used and a reversal is not made “just because it was a planned course,” he said.

One proceeding he does not expect to participate in much further is the natural gas pipeline certificate policy statement notice of inquiry (NOI). The Commission is taking comments to supplement the record on the 2018 NOI (PL18-1), which languished at FERC without activity for several years. Chatterjee believes a full complement of five commissioners is needed for a policy statement, and he said in his more than two years as chairman, he never led an open meeting with five commissioners.

With Glick reviving the NOI and initial comments filed by many parties, it would seem difficult to reach consensus among commissioners, based on comments in gas pipeline certificate cases, Chatterjee said. If he votes on a policy statement “on my way out the door, I don’t know how much value that policy statement would have,” he said. There would be more value if his replacement participated in the case, he said.

The advice he offered a successor stems from a lesson he learned about growing into the role of an independent regulator after coming from the partisan politics of Capitol Hill. “It took me a while to adapt to that role” he acknowledged. He has toned down the tenor of his comments, and that is at the heart of his advice for a replacement. Besides how a commissioner votes, “people pay close attention to what a commissioner says.”

Chatterjee voted against the proposed rule from former Energy Secretary Rick Perry to support coal and nuclear generation units in organized markets in 2018, as did his colleagues in a 5-0 vote. “My vote was correct,” but “my mistake was in the rhetoric” expressing views on the proposal ahead of the vote, he said.

Playing political games at FERC can be “really destructive” and affect billions of dollars in investments, Chatterjee said.

Gas pipeline certificate cases are closely watched, especially with the views expressed by Glick and Clements on greenhouse gas (GHG) emissions and the effects of climate change. That point was highlighted in a recent note from regulatory analysts at Arbo, formerly LawIQ. The note referred to a letter from Senators expressing concern about the number of pipeline projects pending that are due to receive orders on their applications.

Arbo pointed out that Glick recently had FERC staff issue notices of intent to prepare full environmental impact statements for five projects, including one so small that it qualified for construction under a blanket certificate if it had not been protested on the last day for objections to be raised.

While lawmakers may be worried about pending projects, “the concern should really be focused on the fact that the Democrats announced they will reject all expansion projects, even if they are needed to provide heat and power to a state,” Arbo said.

That is not the position Glick has taken, and he has sought to clarify that in the face of similar criticism. During the May 20 open meeting and in numerous other venues, Glick said even if there is a fuller analysis of GHG emissions and a majority at FERC concludes that a pipeline project has a significant effect on climate change, the project could still gain approval. FERC could include mitigation measures in any order granting a certificate or the Commission could conclude that the benefits of a project outweigh the significant impacts on climate change.

The views of Glick and Clements on pipeline projects make a White House nomination to fill Chatterjee’s seat critical for the pipeline sector. “The decision on Commissioner Chatterjee’s replacement is probably the most consequential one facing the industry in decades” Arbo said.

During the interview, Chatterjee added that the votes he took flak from some Republicans about, involving carbon pricing or DER in Order 2222, actually embrace conservative principles of emphasizing markets. Having a price on carbon instead of subsidies in a market is a step in favor of markets, which has been a consistent thread in his positions. He expressed hope that over time, anyone who harbors animosity towards him for those votes will realize the market focus and conservative nature of the proposals.

Another White House nomination of interest to the energy sector that has not been announced is administrator at the Pipeline and Hazardous Materials Safety Administration (PHMSA). Acting Administrator Tristan Brown has been in that role since the departure of Howard “Skip” Elliott, who served as PHMSA administrator in the Trump administration. Brown previously worked in the Senate, and at the Environmental Protection Agency, along with being an attorney in private practice.

Inquiries into the White House press office on when nominations for the FERC seat and PHMSA administrator role might be coming have not generated a response.

By Tom Tiernan ttiernan@fosterreport.com


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