Week Ending June 19, 2020

Commissioners Address Racial Justice Before Turning to Agenda Items at FERC Meeting

This Article Appears as Published in Foster Report No 3304
Commissioners Address Racial Justice Before Turning to Agenda Items at FERC Meeting

The weeks of racial dialogue and actions in the U.S. have not gone unnoticed by FERC, leading commissioners to address the issues before they turned to agenda items for the June 18 open meeting.

Chairman Neil Chatterjee reflected on different events and experiences and vowed to keep the Commission a workplace free from prejudice or discrimination. He committed to protect employees and work with others to develop focus groups, enhanced training on inclusiveness and augment existing steps to promote a diverse and healthy workplace culture.

Commissioners Richard Glick and Bernard McNamee had comments similar to each other that American ideals of liberty and justice for all are not always fulfilled in African American and minority communities. The commended Chatterjee for striving to address the issues as an agency.

Commissioner James Danly expressed appreciation for the comments of his colleagues.

Among other topics addressed by the commissioners during the meeting were the final rule regarding natural gas pipeline construction while rehearing requests of FERC orders are pending, the announcement of a technical conference on carbon pricing in organized wholesale power markets, fuel security for generators at ISO New England, a cybersecurity Notice of Inquiry (NOI) on a framework developed by the National Institute of Standards and Technology (NIST), an upcoming FERC staff white paper on cyber protections, some personnel changes within commissioner offices and McNamee confirming that he will stay at the Commission beyond the expiration of his term on June 30.

When McNamee announced in January that he will not seek another term, he said he would stay beyond the end of his term if needed, since FERC had three commissioners at the time and a departure would mean the Commission would not have a quorum. With the arrival of Danly, however, he could exit and FERC would still have the minimum of three commissioners needed for a quorum.

“I intend to continue serving for the foreseeable future,” McNamee said, without defining how far into the future that will be. FERC rules allow him to stay as commissioner until replaced – and no nomination has come from the White House, let alone a nomination for the vacant Democrat spot – or until the end of the current session of Congress.

McNamee said he will recuse himself from proceedings if needed as he pursues work outside of the Commission. He said he has enjoyed being in the regulatory community and playing a role in matters important to the energy sector, and is impressed how well FERC has functioned with employees working remotely during the COVID-19 pandemic.

During a press conference after the meeting, Chatterjee discussed his thoughts on staff returning to work at the headquarters building, indicating he is in no hurry to have them return to 888 First Street. FERC has been able to meet its mission, address statutory requirements and stay engaged with stakeholders and the public while working remotely, he said.

“The health and safety of employees is the primary concern,” Chatterjee said, adding that he does not feel that bringing FERC staff back to their offices provides benefits commiserate with the risks associated with coronavirus exposure.

The Office of Management and Budget has left the decisions on such matters to individual agencies, and Chatterjee said he would begin a phased return to work when circumstances improve. Those circumstances include when mass transportation options are more available, along with the availability of personal protective equipment (PPE) and supply chain issues around PPE are addressed.

Danly focused his remarks on the recent final rule issued by FERC to withhold any authorization to begin construction of natural gas pipelines until rehearing requests are addressed. The final rule was issued while a case is pending at the U.S. Court of Appeals for the D.C. Circuit, and it changes FERC regulations so that natural gas pipeline construction would have to wait for an order on rehearing when a Natural Gas Act (NGA) certificate order is challenged.

Observers have questioned the effectiveness of the order and whether it will appease the judges on the D.C. Circuit, who during an April 27 oral argument expressed uneasiness with pipelines being able to use eminent domain authority to condemn land for pipeline construction while rehearing requests are pending. Glick deemed the move a step in the right direction, but he raised concern about the rule not addressing eminent domain authority, suggesting adoption of a practice where NGA certificate orders are stayed, or held from taking effect, pending FERC action on timely filed requests for rehearing.

Danly, the former general counsel at the Commission, said judicial rulings prevented FERC from going that far and calling for stays of NGA certificate orders to delay eminent domain from being used. “It is far from certain that we could do that” based on past decisions that limit FERC’s ability to wade into the jurisdiction of district courts that handle eminent domain authority, Danly said. That eminent domain authority is granted to pipelines through NGA certificate orders, and the statute does not enable FERC to condition any approval to limit eminent domain from being used, he said.

Danly said he shares Glick’s concerns about the consequences for landowners, but legal precedent does not allow FERC to ignore the limitations on its ability to address eminent domain matters.

Chatterjee picked up on that theme during the press conference, asserting that the final rule is squarely within FERC’s authority while the legality of staying a certificate order to halt eminent domain is uncertain.

Chatterjee declined to speculate on how the D.C. Circuit may rule in the pending case or if he thinks the new rule will assuage judges’ concerns raised during oral argument.

“We are making these changes to provide relief to landowners as quickly as possible,” with the final rule working in conjunction with previous steps taken to limit the use of tolling orders in pipeline cases, the chairman said. He termed the rule a measured and reasonable response to the issues presented by landowners.

Glick continued to note that landowners can have their property taken for pipeline construction and installation, citing an example of Spire STL Pipeline, which was approved before Chatterjee made staffing changes and called for rehearing requests to be addressed within 30 days. The Spire pipeline in Illinois and Missouri was approved by FERC in August of 2018, and two weeks after that condemnation proceedings in courts began in both states, Glick said. By the time FERC issued a rehearing order 15 months later – which denied rehearing requests – the pipeline had been built, farmland was flooded due to construction practices and landowners had little recourse for relief through an unfair process at FERC, he said.

Addressing an agenda item on the NOI for cybersecurity in the power sector, Chatterjee said the Commission is seeking input on the NIST framework and whether any changes need to be made in the critical infrastructure protection (CIP) standards developed by the North American Electric Reliability Corp. and approved by FERC. Cyber threats continue to evolve and FERC needs to evaluate the CIP reliability standards to maintain a robust defense and protect the power grid, Chatterjee said during the press conference.

FERC staff compared the NIST frameworks with the CIP standards and identified certain items that may need to be addressed in the CIP standards, Chatterjee said. The NOI seeks comments on that, and it dovetails nicely with the upcoming white paper, he said.

The white paper will raise the issue of whether incentives are needed for companies to go above and beyond the CIP standards. Possible adders to returns on equity for companies that pursue cybersecurity controls including in the NIST framework is among the options mentioned in the white paper, which will also be the subject of comments from stakeholders, Chatterjee said.

By Tom Tiernan ttiernan@fosterreport.com

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