Week Ending October 26, 2018

Reactions Reserved as Chatterjee is Named Chairman and McIntyre Moves to Commissioner

This Article Appears as Published in Foster Report No 3221
Reactions Reserved as Chatterjee is Named Chairman and McIntyre Moves to Commissioner

Sudden changes in leadership at FERC are getting to be more common, with the latest move resulting in Neil Chatterjee being handed the chairman’s gavel by the White House after Kevin McIntyre relinquished it in an October 22 letter to President Donald Trump.

Those affected by the changes and a few former commissioners commented on the increased turnover at the chairman position, which has been unprecedented, with an energy industry that is more accustomed to changes compared with years past. The energy industry generally prefers consistency and certainty, but with so many changes in the industry itself and at the regulatory level, leadership changes at FERC are not as unsettling as they may have been previously, sources said.

“The energy sector is more understanding of the recent changes” because they have been beyond anyone’s ability to affect or predict, said Colette Honorable, a former commissioner and current partner at Reed Smith.

The energy companies regulated by FERC also are more dynamic and able to adjust to changing market forces than they were even five or ten years ago, added others reached for this story that did not want to be named. The fact that Chatterjee previously served as chairman for four months in the fall of 2017 also provides some comfort and familiarity, compared with a chairman that would come in and have a new agenda, said a natural gas industry source.

The reactions to the change in FERC chairmen have been tempered due to the circumstances surrounding it, with McIntyre moving out of the chairman spot due to health issues. Many used terms such as unfortunate, sad and heartbreaking and expressed hope that McIntyre will recover to full health, without much information on the situation.

Trump named Chatterjee chairman late in the day on October 24, without additional comment or indicating how long that will be effective. “It is with a heavy heart that I step into this role” while McIntyre focuses on what is most important, his recovery and his family, Chatterjee said in an October 24 statement.

McIntyre received well wishes and prayers for a recovery from many quarters, including fellow Commissioners Cheryl LaFleur and Richard Glick, Sen. Lisa Murkowski (R-Alaska), chairman of the Senate Energy and Natural Resources Committee, energy trade groups, and others.

In his letter to Trump, McIntyre said he has strived to perform the duties of chairman with full attention and vigor, despite facing some health challenges, which included surgery for a brain tumor in 2017 and breaking several vertebrae in a fall in the summer of 2018.  He touted accomplishments and noted that he has worked tirelessly to ensure that FERC acts have been consistent with the law and the best policy interests of the nation.

“However, I very recently experienced a more serious health setback, leaving me currently unable to perform the duties of chairman with the level of focus that the position demands and that FERC and the American people deserve. I therefore propose to step aside from the position of chairman and its additional duties so that I can commit myself fully to my work as commissioner, while undergoing the treatment necessary to address my health issues,” McIntyre said in the letter.

McIntyre has not voted on notational orders since October 17, and he did not vote on items at the October 18 open meeting, which was the second Commission meeting that he missed. On matters where McIntyre is not voting, the Commission has Glick and LaFleur – both Democrats – participating with Chatterjee, a Republican. Chatterjee previously was chairman in the fall of 2017, before McIntyre was confirmed by the Senate and sworn in on Dec. 7, 2017.

In his statement, Chatterjee praised McIntyre for his “steadfast leadership” on many significant issues that have come before the Commission. “Although this is a difficult period for the Commission, I want to assure my fellow Commissioners, staff within the building and stakeholders outside it, that it’s my full intention to build upon Kevin’s hard work. But above all, I look forward to the day when my friend is back at full capacity.”

Others reached for comment said they do not expect any change in direction or priority under Chatterjee as chairman.

There are a number of important cases that need to be voted on and it is important for FERC to have a full complement of commissioners, with a vacancy due to the August departure of Robert Powelson, noted Honorable. There is no interim designation in the White House announcement naming Chatterjee as chairman, so “he has the authority to run the agency as needed to meet the public interest,” she said.

“The main authority the chairman has is the control of the agenda” for the agency and some discretion about the use of staff resources, noted Branko Terzic, managing director at Berkeley Research Group and a former commissioner at FERC and with the Wisconsin Public Service Commission. A chairman can have FERC address priorities and tackle orders for certain initiatives, assuming there is a majority that supports those views, said Terzic, who also served as chairman, president and CEO of Yankee Energy System, a subsidiary of Eversource Energy.

Chatterjee’s term at the Commission extends to June 30, 2021, so there is some stability in that regard, said Terzic.

Although Chatterjee previously served as chairman before McIntyre was sworn in, he would have viewed the job differently following a period without a quorum and knowing that McIntyre would be chairman upon confirmation by the Senate. A chairman would not exert any preferences with someone waiting in the wings, so to speak, so “I would not evaluate his future chairmanship based on the past interim period,” Terzic said.

With the two Republicans and two Democrats at the Commission, and Glick and LaFleur issuing dissenting statements on some natural gas pipeline orders approving certificates when Powelson was a swing vote, the prospect of a lengthy period with a 2-2 split is more of a concern than who is chairman, said the gas industry source.

FERC staff and office directors get to know a chairman’s priorities, and when a chairman has been in the position for a stable period it can help in terms of carrying a unified message to the industry, lawmakers and others, the source said.

In their separate statements, LaFleur and Glick commented that they view the current period as a time for cooperation among everyone at FERC, which has a tradition of being non-partisan as an independent agency. “In the coming weeks, let us reaffirm our commitment to consensus building and to maintaining the agency’s independence as we engage the nation’s energy business,” Glick said.

LaFleur noted that the Commission has experienced a lot of change and transition during her eight years at FERC, which has included different periods as chairman. “I know that our wonderful employees will stay strongly focused on their important work and the mission of the organization during leadership changes, as they have in the past,” she said. “We are very lucky to have such a strong team in place across the Commission,” she said.

From the end of 2016 to the current week, there have been five chairmen at the Commission. Those are Norman Bay, LaFleur, Chatterjee and McIntyre, with Chatterjee’s current stint as chairman marking the fifth.

In contrast, from late 2001 to early 2009 there were two chairmen, Patrick Wood and Joseph Kelliher.

Sometimes a change in chairman has a direct impact on the direction and focus of the Commission, and sometimes the changes are subtler, sources noted.

Having served as commissioner under two different chairmen of the same political party – Bay and LaFleur – Honorable said she saw a difference in how they tackled items that came their way or sorted out priorities. Viewing the chairman as a person managing a large train station, she said chairmen can position trains differently to affect their schedules.

McIntyre told Trump that he will forever be grateful for the opportunity to serve as chairman and the trust he received for placing him in the leadership role at a critical time in FERC’s history. “I continue to be deeply grateful for the unwavering support and encouragement I have received from you, Mr. President, and from all other corners,” he said.

McIntyre added that he has devoted his entire professional life to the energy industry and remains committed “to the mission of FERC and to my service as Commissioner, and I look forward to supporting the next FERC Chairman through any transition and throughout my tenure.”

William Scherman, partner at Gibson, Dunn & Crutcher and former general counsel at FERC, echoed the comments of Chatterjee and expressed hope for a speedy recovery for McIntyre. If McIntyre makes a recovery to full health, Scherman said he would expect the White House to name him chairman again and that Chatterjee would support such a move.

In terms of participation as a commissioner, Scherman said he expects McIntyre to vote on orders “God willing, as his health improves.”

In her statement, Murkowski thanked McIntyre for his leadership at the agency and prayed for his return to good health as a commissioner. “I’m confident that Chairman Chatterjee will once again effectively lead the agency, and I will work with my Senate colleagues to restore a full complement of commissioners as quickly as possible,” she said.

The president has the authority to designate the chairman at FERC and does not require Senate approval to do so, Murkowski noted.

The White House has nominated the Department of Energy’s Bernard McNamee to fill the spot of Powelson, with a Senate committee hearing scheduled for November 15.

Scherman said he expects the Senate to approve McNamee during a lame duck session of Congress before the end of the calendar year, while others reached for this story are skeptical of full Senate approval in that time frame. A lot can depend on whether Democrats gain a majority in the Senate in the midterm elections, whether McNamee might be paired with a nominee at FERC or some other agency that Democrats support, how he fares during the committee hearing and the priority of a majority party to schedule a floor vote, sources said.

Compared with previous years when Senate votes were more predictable, “I cannot speak with any degree of certainty about what the Senate might do” with McNamee’s nomination, said Honorable.

Like others, she does expect Senate committee members to question McNamee thoroughly on his capabilities and understanding of the Commission’s quasi-judicial role as an independent agency given that he would be transitioning from a policy position within the Trump administration. Senators likely will ask him about a willingness to work in a way that is consistent with FERC’s fuel-neutral authority under the Federal Power Act, Honorable said.

A former state regulator from Arkansas, Honorable believes FERC could benefit from having someone at the Commission with that background, since there are areas in FERC’s jurisdiction where federal and state issues collide. With Powelson’s departure, FERC has been without a commissioner that served as a state commissioner for the first time since 1990. State regulators understand the role of infrastructure development, rates and policy decisions with respect for the sovereignty of states and the authority of FERC, Honorable said.

Clear View Energy Partners expects McNamee to be confirmed before the end of the year, the firm said in a note to clients.

It included a caveat, however, that the White House may nominate a Democrat to take over for LaFleur, whose term expires on June 30, 2019. That might be the case if Democrats in the Senate prefer someone other than LaFleur at the Commission or she expresses a desire not to seek another term. “It is often (but not always) easier for a narrowly divided Senate to more expeditiously confirm nominees in bipartisan pairs, as both sides are theoretically motivated to approve both nominees in order to ensure the ascension of their preferred candidate,” Clear View said. If that were to be the case, FERC could continue with its current 2-2 alignment for some time.

By Tom Tiernan TTiernan@fosterreport.com

 

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