Week Ending January 11, 2019

McNamee Provides Recusal Response to Senators Based on Ethics Guidance

This Article Appears as Published in Foster Report No 3231
McNamee Provides Recusal Response to Senators Based on Ethics Guidance

FERC Commissioner Bernard McNamee informed Senators of the ethics guidance he received about when he may need to recuse himself on a matter before the Commission due to his background with the Department of Energy, work on the power grid resilience proposed rule, and statements about renewable resources.

Many in Washington were parsing through what the advice from FERC’s designated ethics official would mean for McNamee, but the commissioner did not indicate when he would recuse himself in a brief letter. “As I stated in my confirmation hearing, I pledge to be a fair, objective and impartial arbiter in the cases and issues that will come before me as a Commissioner, and my decisions will be based on the law and the facts, not politics,” McNamee said in the January 7 letter.

The letter was in response to a request from 17 Democratic Senators who asked him to provide information by January 9 about recusal guidance he sought and ethics guidance he received. In a January 8 post on Twitter, Sen. Catherine Cortez Masto (D-Nev.) urged FERC “to continue exercising oversight on matters that may warrant recusal in order to hold our leaders accountable & ensure impartiality.”

Previously, Cortez Masto said McNamee “must recuse himself from ANY future business at FERC involving the potential subsidization of coal & nuclear plants” since his actions have suggested a bias against renewable energy technologies.

Among the items that sparked concern from Senators and others was McNamee’s involvement in the proposed rule (RM18-1) while he was at DOE, an op-ed he wrote in support of fossil fuels, and video from a February 2018 event when he worked at the Texas Public Policy Foundation (TPPF). In the hour-long video, McNamee says the intermittent nature of renewable resources “screws up the whole physics of the grid,” criticizes groups that support renewable resources, and questions the science associated with climate change.

The grid resilience proposed rule from DOE was rejected on a 5-0 vote in early 2018, and a separate proceeding was opened (AD18-7), where FERC sought and received input on numerous questions surrounding grid resilience and generation attributes. Because the proposed rule is pending on rehearing and the Commission has not indicated what steps it may take in the separate proceeding, Senators and others have stated that McNamee should not participate in those proceedings and others where generation resources and attributes are a theme.

The Harvard Electricity Law Initiative said McNamee should recuse himself from the rulemaking and related dockets and any other matters about rates from “fuel secure” power plants. Recusal is not an admission of bias, but it protects the Commission against an appearance of bias in case a decision is challenged in court, wrote Ari Peskoe of the Harvard ELI.

The senators made somewhat similar points in their December 12 letter, noting that they have been troubled by the Trump administration’s “persistent efforts” to interfere with energy markets to subsidize coal and nuclear generation assets.

During the Nov. 15, 2018 hearing before the Senate Energy and Natural Resources Committee, McNamee said he would consult with ethics officials about specific topics he should or should not participate in as commissioner, noting that the proposed rule is related by different than the proceeding where FERC has received comments on resilience issues.

McNamee informed the FERC ethics official, Charles Beamon, that he would recuse himself from any action on the proposed rulemaking, and Beamon indicated such a move is consistent with case law and legal standards.

Beamon said he advised McNamee that the relationship between the proposed rule and the comment proceeding does not require a recusal in the comment proceeding. “Based on the facts known to me, I do not view your prior position and statements as demonstrative of an unalterably closed mind as to that administrative docket,” Beamon wrote to McNamee.

He cautioned, however, that “we must exercise continued oversight to ensure that Docket No. AD18-7 does not develop in such a way as to replicate or closely resemble Docket No. RM18-1, which given your prior participation would require your recusal.”

Beamon added that McNamee appreciated the guidance and repeatedly encouraged him to recommend recusal in any instances of doubt or if there is uncertainty on the propriety of McNamee’s participation in a case.

The “unalterably closed mind” standard for recusal can be difficult for groups seeking recusal to meet, legal scholars have noted, and the caselaw differs on adjudicatory matters and rulemaking proceedings. Courts have consistently recognized that agency officials must be able to engage in public debate and discussion about policy matters, since they are often selected based on their prior experience, Beamon noted. The question of recusal can come down to whether an official has decided a matter regardless of the evidence, and it is up to the individual to determine that on a case-by-case basis, he told McNamee.

Several groups expressed concern that McNamee has not stated clearly that he would recuse himself from the resilience docket or related proceedings. The Natural Resources Defense Council (NRDC) and the Sustainable FERC Project believe that the resilience docket meets the criteria for recusal and “we will be watching this issue closely in the weeks and months ahead,” said Gillian Giannetti, attorney for NRDC.

“This is an important step to maintain the independence of FERC, and he should recuse himself from any similar proceedings,” Giannetti said on Twitter.

“I’m concerned that McNamee’s recusal guidance is too narrow, although it did say it would be continuously evaluated,” Tyson Slocum of Public Citizen said in an email response to questions on the recusal process.

The Sierra Club is among the groups that have filed motions seeking McNamee’s recusal on the grid resilience issues, and it was critical of McNamee for not taking a stand on recusals after receiving guidance from Beamon. “If he believes in FERC’s mission and the rule of law, he must affirmatively state that he will recuse himself from all coal bailout matters. That’s the only way stakeholders and the public can reasonably assume that he will be an objective arbiter as a FERC Commissioner,” said Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign.

The guidance from Beamon, recounting legal standards, due process considerations, and applicability in the case of McNamee, also referenced two previous cases where a group asserted that a FERC commissioner should have recused himself based on previous employment or comments made in a public forum. In the latter instance, involving former Commissioner Philip Moeller and a 2011 order on the PJM Interconnection capacity market, the Maryland Public Service Commission sought rehearing of an order based on Moeller’s comments at a public event that legislation in New Jersey would “crater the capacity market.”

The case did not demonstrate that Moeller had made up his mind regarding two subsequent proceedings on the PJM market that were filed with FERC, Beamon noted. Such issues are considered in each proceeding on a case-by-case basis, he told McNamee.

In that 2011 order, the Commission said it was not persuaded that Moeller’s decision not to recuse himself represented an abuse of discretion meriting a change on rehearing, and the Maryland PSC did not meet the legal standard for a recusal. The presumption of a commissioner being an objective arbiter cannot be overcome by merely taking a public position or expressing a strong view with respect to an issue in dispute, FERC said, adding that if the PSC’s position was adopted, a FERC commissioner could never speak out on any issue.

The courts have recognized that agency officials may meet with members of the industry to maintain the agency’s knowledge of the industry it regulates and such contacts “are the ‘bread and butter’ of the process of administration and are completely appropriate so long as they do not frustrate judicial review or raise serious questions of fairness,” according to the order.

The contacts and statements that the Maryland PSC complained about all took place before proceedings were filed at FERC and did not indicate that Moeller had pre-judged any of the legal or factual issued faced by the Commission, it said. “Rather than indicating that his mind was made up, Commissioner Moeller’s statements indicate that his mind was open rather than closed,” as his comments recognized how the legal and political battles play out in the regulatory arena at FERC could be “very good theater,” FERC concluded.

By Tom Tiernan TTiernan@fosterreport.com

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