Week Ending September 13, 2019

FERC Ethics Official Mistake Affects Glick; McNamee Receives Waiver

This Article Appears as Published in Foster Report No 3265
FERC Ethics Official Mistake Affects Glick; McNamee Receives Waiver

The voting and quorum issues associated with having three commissioners at FERC has again come up, as Commissioner Richard Glick was informed of a mistake by FERC’s designated ethics official that results in him needing to recuse himself or seek a waiver until the end of November on matters where AvanGrid, his former employer, is a party in a proceeding.

Glick worked at AvanGrid, formerly Iberdrola USA, until Feb. 5, 2016, when he returned to the Senate Energy and Natural Resources Committee and then-Ranking Member Sen. Maria Cantwell (D-Wash.). FERC’s designated ethics official, Charles Beamon, previously had told Glick that the Trump administration ethics pledge required him to recuse himself from matters in which AvanGrid is a party for two years from the last day of employment at the company.

In meetings and correspondence made public by Glick, Beamon informed him that an error was made, and the ethics pledge required him to recuse himself from such cases for two years from his appointment, having been sworn in Nov. 29, 2017, and not when his employment at Iberdrola ended.

In a statement, Glick said immediately after meeting with Beamon on September 10 when he was informed of the error, he ceased work on all matters – and instructed his staff to do the same — where AvanGrid or any affiliate is a party, including where AvanGrid was only a “doc-less” intervenor to monitor a proceeding. “My advisors are also currently researching which proceedings I already voted on where AvanGrid was a party and which orders the Chairman has indicated he intends to bring up for a vote soon where AvanGrid intervened in the underlying proceeding,” Glick said.

In a September 11 memo, Beamon said his previous guidance to Glick did result in the commissioner participating in matters where AvanGrid or an affiliate is involved that should have been covered by the ethics pledge recusal period. His previous guidance to Glick was that the commissioner could vote on such matters starting in February of 2018.

Beamon surmised that in the majority of those matters, AvanGrid was only a “doc-less” intervenor, to be on the service list and follow a case. “The long-standing position of our office is that doc-less interventions do not warrant a recusal under the ethics regulations or ethics pledge, because there is no expressed position of record or substantive participation,” Beamon said.

Beamon said Glick informed him that in the coming months, Glick will either recuse himself from cases where AvanGrid is a party or seek a limited waiver to the ethics pledge if needed to preserve a quorum. This would cover matters through the end of the ethics pledge recusal period of November 29.

Glick said he intends to have a follow-up conversation with Beamon and the ethics office staff, and to speak with Chairman Neil Chatterjee “as soon as I have additional information.”

It appears this came to light as a result of Glick reaching out to Beamon after seeing media reports about a waiver received by Commissioner Bernard McNamee involving cases where one or more parties were represented by McGuire Woods LLP, McNamee’s former employer.

The designated ethics official for the White House, Scott Gast, provided Beamon a limited waiver of the Trump administration ethics pledge made on behalf of McNamee. The pledge prohibits appointees from participating in any matter involving parties that is directly and substantially related to a former employer or former client for two years from the date of their appointment. The limited wavier of that section of the ethics pledge permits McNamee “to participate in particular matters involving specific parties in which one or more parties is represented by his former employer McGuire Woods,” Gast said.

The waiver does not include matters in which McNamee participated personally and substantively while serving as an attorney at McGuire Woods.

The August 29 document from Gast provided to The Foster Report had a few parts blacked out, where Gast indicated the number of former clients and their respective affiliates covered by the waiver and mentioned them. McNamee has not represented any of those former McGuire Woods clients in any matter before FERC, Gast noted.

He deemed it appropriate and in the public interest to grant the waiver to ensure McNamee’s participation in significant issues before FERC.

Beamon likely provided documentation or an explanation to McNamee following receipt of the waiver from the White House, but his office did not make that available. “The limited waiver will permit him to vote on matters he might not otherwise have been able to,” a spokeswoman for the Commissioner said September 12.

McNamee will continue to seek guidance and advice from Beamon’s office as issues arise, she added.

One of the more pressing matters pending at FERC is a follow-up ruling on PJM Interconnection’s capacity auction, which was the subject of a July 25 order directing the grid operator not to hold its base residual auction in August as PJM had planned. The decision followed nearly a year of inaction after a June 2018 order where FERC deemed PJM’s existing rules for the auction would not produce just and reasonable rates.

McNamee has previously voted on PJM matters, including the July 25 order, but will always consider potential ethics issues when determining his ability to vote, the spokeswoman noted.

At the bare minimum of three commissioners needed for a quorum, the recusal of one commissioner would result in a lack of quorum and no action in a proceeding. Some of the quorum concerns appeared to be minimized when Chatterjee spoke with reporters September 4, where he expressed confidence that FERC can address challenging questions and cases before it with the three commissioners.

He expressed similar views following a speech to the National Coal Council September 11. Chatterjee believes McNamee can participate in matters as a result of the waiver, but recusal decisions are always up to the individual commissioners, he told reporters. He declined to indicate if he knew of the waiver when he spoke at a Resources for the Future event September 4.

He was not a party to any of the correspondence, but he knows FERC’s ethics office and White House staff take ethics issues very seriously, Chatterjee said. He was not asked about Beamon’s interactions with Glick, as those became known after his evening speech to the National Coal Council.

A decision in the PJM capacity market/auction case in September or early October could make an auction planned by PJM in April or May of 2020 feasible, said Christine Tezak, managing director at ClearView Energy Partners. Two auctions would be held for power deliveries covering parts of 2022-2023 and 2023-2024, Tezak noted. The absence of a FERC order into November or December might not leave enough time for PJM to file tariff changes and set parameters for both auctions next spring, she said.

Tezak interpreted the disclosure of McNamee’s waiver, which came from news outlets, as an indication that an order on PJM may be coming in the near future, but how the Commission intends to address the case is far from clear.

In his remarks to the National Coal Council, Chatterjee commented on goals he has for the coming months, including the power grid resilience proceeding that was started after FERC rejected the notice of proposed rulemaking submitted by Energy Secretary Rick Perry to support coal and nuclear generation resources in organized markets.

Because McNamee worked on the NOPR while he was at the Department of Energy – in between his work at McGuire Woods and being appointed to FERC — many FERC observers expect him to recuse himself from any decision in the grid resilience 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. The waiver does address his participation in the resilience docket.

McNamee was sworn in at FERC Dec. 11, 2018, which would put his ethics pledge recusal period two years after that date. The waiver allows him to vote on matters involving former clients.

“There’s a conflict here, and both FERC and Commissioner McNamee need to provide an explanation for this discrepancy,” said Tyson Slocum, director of the energy program at Public Citizen.

In his statement, Glick said he takes the ethical obligations of being a commissioner very seriously and that he would never knowingly violate any ethical standard in a law, regulation, or policy. Had he known about the correct interpretation of the Trump administration ethics pledge being from the date of appointment and not last date of employment as he was told, he would have continued to recuse himself from matters involving AvanGrid.

“I also believe it is important that I act as transparently as possible each and every day that I serve as a commissioner,” he said. That is why he included documents along with the statement that covered an email exchange with FERC’s ethics office over several days in December of 2017, a memo memorializing a September 10 meeting with Beamon, and a memo from Beamon on the same meeting.

Glick’s transparency was contrasted with the approach of McNamee by Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. McNamee has not participated in more than 160 proceedings at FERC and has not provided an explanation. “Glick could have chosen never to reveal any of this and hope that no one discovered this and filed a lawsuit,” Peskoe said September 12 on Twitter.

Peskoe also questioned the consequences of Glick’s notification and his intent to recuse himself from any matters involving AvanGrid. “Presumably, that includes the PJM capacity market proceeding” where AvanGrid has filed and the grid resilience docket.

Another issue is whether any of the FERC orders where AvanGrid participated and Glick voted are now vulnerable to legal challenges, including the ISO New England case about fuel security. The legal standard for such challenges is whether there is and appearance of bias, and not whether there is an actual bias, regardless of the vote count on a matter, Peskoe said.

Others on Twitter commented that the voting and quorum concerns should prompt the White House to nominate two new commissioners for the open seats. If any new nominees are confirmed by the Senate, then there would be a quorum regardless of the participation of Glick and McNamee, said Casey Roberts, an attorney with Sierra Club.

Sources have heard nothing from the White House in terms of timing on a nomination or a package of two nominations for the open seats. At various venues over the past several weeks, Chatterjee offered no insights on 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.

At a September 13 press conference, Perry was asked about the timing of any nomination from the White House, as he has previously stated he hopes the White House would make filling the vacant seats a priority. He maintains that view, but said the White House “may have a different strategy.”

There is a quorum at FERC and the Commission can meet and get things done at this time, Perry said, adding that he is not going to try and speak for the White House on the FERC nomination process.

By Tom Tiernan, ttiernan@fosterreport.com

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