Week Ending November 8, 2019

Danly’s Senate Hearing Has Limited Contentious Comments

This Article Appears as Published in Foster Report No 3273
Danly’s Senate Hearing Has Limited Contentious Comments

Aiming to address any unpleasantries before senators could make political hay of concerns about the White House nomination of James Danly to be a commissioner at FERC, Sen. Lisa Murkowski (R-Alaska) addressed a few points of contention early in the November 5 hearing.

Murkowski, chairman of the Senate Energy and Natural Resources Committee, noted that the White House not nominating a Democrat to pair with Danly, a Republican who is currently the general counsel at FERC, is not that unusual and that Danly has no oversight of FERC’s designated agency ethics official (DAEO). The ethics office at FERC came under scrutiny when Charles Beamon gave incorrect advice to Commissioner Richard Glick on when Glick should recuse himself from participating in cases when a former employer, Avangrid, is part of the case.

Senate Minority Leader Charles Schumer, who has forwarded the paperwork for Alison Clements, a Democrat, to the White House to fill the seat vacated by former Commissioner Cheryl LaFleur, sent a November 4 letter to the Department of Energy Inspector General and DOE’s Office of Government Ethics seeking a review of “inconsistent and inaccurate ethics advice” from FERC’s Office of General Counsel. In the letter, Schumer said the provision of deficient ethics advice has resulted in delays to important projects, opened FERC decisions to legal challenges, and could lead to the erosion of the public’s confidence in FERC.

Answering questions from Murkowski during the hearing, Danly said as general counsel, he has no role in the provision of ethics advice from DAEO. The Office of General Counsel does not oversee DAEO and he has not been involved in any advice given to anyone at the agency, Danly said.

Speaking with reporters after the hearing, Murkowski said Schumer’s letter was a weak attempt to “throw a wrench in the works” of the nomination process, and that Danly disposed of the matter cleanly. “I don’t think it worked at all,” she said of Schumer’s letter, since DAEO is not within Danly’s oversight.

When asked about a possible committee vote on Danly and Katharine MacGregor, nominated to be deputy secretary at the Department of Interior, Murkowski said she’d like to move the nominations “in an expeditious manner.” Pressed on if that meant a committee vote before the Thanksgiving holiday, she said “that would be nice,” noting that she was holding the record open for further questions from senators until the close of business November 6.

Danly told senators that his comments about being a “humble regulator” refer to his philosophy of carrying out duties within the constricts of the law. He views the role of commissioner as more of an adjudicator than a policymaker. While FERC can make rulemakings to change the way it oversees energy markets, the vast majority of the work is adjudicatory and more akin to being a judge than setting new policies, he said.

When asked about different market changes, Danly said he sees no need for a major revision of wholesale power markets, but there is work to do for the Commission and utilities to ensure accurate price signals are sent to the market. One of the basic objectives of capacity markets in organized wholesale power markets is to address resource adequacy and price signals that ensure peak electricity demand can be met, with enough margin so that grid reliability is not threatened, he said.

In his role as general counsel since 2017, he has seen the dedication of FERC staff and the challenges associated with oversight of energy markets, Danly told lawmakers.

President Donald Trump on September 30 announced the intent to nominate Danly for the Republican slot of the two vacant commissioner seats, and the decision to not pair him with a Democrat stirred angst among Democrats and environmental groups. The White House decision to break from a tradition of pairing a Republican and a Democrat to ease the Senate confirmation process has been criticized, especially since Schumer (D-N.Y.) has forwarded background checks and vetting information for Clements to be the Democrat nominee.

During the hearing, Murkowski expressed her support for both nominees, and noted that the seat of former Chairman Kevin McIntyre has gone unfilled for more than 10 months. The fact that Danly was not paired with a Democrat should not lead anyone to oppose his nomination, she said. It is not fair to make a well-qualified nominee wait for a Democrat counterpart, she said, referring to Danly’s experience at FERC and previous service in the U.S. Army, where he completed two tours of duty in Iraq and received a Bronze Star and a Purple Heart.

“I would remind my colleagues that FERC is set up to avoid the need for pairings, that we already paired this seat for the current term in 2017,” when McIntyre was nominated along with Glick, she said.

Sen. Joe Manchin (D-W.Va.), ranking member of the committee, said Clements should be nominated for the vacant commissioner spot at FERC, as she has been vetted and Republicans would still have a 3-2 majority among commissioners. Murkowski agreed that it is best to have five members of the Commission to be able to function well as an independent agency.

“When we receive a Democratic nominee, we will hear that nomination as we normally would. If that individual has support to be reported from committee, we will move to report his or her nomination to the full Senate,” she said.

Several times during the hearing and afterwards, Manchin said he hopes the White House might have a nomination for Clements sent to the Senate soon.

Manchin told Danly that he expects commissioners to be free from political influence and make determinations on power grid reliability, natural gas and electric rates and infrastructure as an independent agency.

Several senators brought up their favorite topics with the two nominees. Sometimes that was permitting for oil and natural gas exploration on federal lands, maintaining baseload generation levels to support grid reliability and resilience, lengthy delays on obtaining hydropower project licenses, funding for national parks maintenance, and Trump administration policies on the environment.

Sen. Maria Cantwell (D-Wash.), who recently asked questions and received answers from FERC Chairman Neil Chatterjee on FERC’s Office of Enforcement activities, with smaller financial penalties, asked Danly if he will have a bright line against market manipulation. Policing the energy markets and ensuring participants have faith in the markets is one of the most important roles for a commissioner, Danly said.

Cantwell, a past ranking member of the committee, asked whether FERC’s 5-0 vote against the Secretary of Energy’s proposed rule to support coal and nuclear generation units could be revised with new members at the Commission. Danly answered that theoretically it could be possible, but there are other emergency authorities available to the executive branch to ensure grid reliability and resilience is maintained.

Twice during the hearing, protestors interrupted the session and were escorted out by security, shouting about changing from fossil fuels to wind and solar resources.

Sen. Martin Heinrich (D-N.M.) said he is “deeply worried” that FERC is becoming more of a political entity that is an extension of the White House and DOE. He referred to Chatterjee being critical of the media and posting online comments not befitting a chairman at FERC. Heinrich did not ask Danly to address the comments, but said he hopes Danly can help address how the Commission is viewed, and maintain its independence.

If the dialogue of polarization continues, the nation risks tearing down the norms that have made it effective and the back and forth between extreme positions could become untenable, Heinrich asserted. The favoritism of some fuels or energy resources could reach such a level that someone like a protestor who was removed from the room would be nominated for a commissioner post and no pipelines would be approved by FERC, he said.

By Tom Tiernan ttiernan@fosterreport.com

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