Drama at the FERC
In one of his first moves in office, President Donald Trump replaced Norman Bay as chairman of the Federal Energy Regulator Commission (FERC) with acting Chairwoman Cheryl LaFleur. Bay then tendered his resignation, effective February 3. Bay’s resignation left the typically five-person FERC with only two commissioners, short of the necessary three-person quorum. FERC regulates interstate oil and gas pipelines, electricity transmission lines, liquefied natural gas terminals, hydropower projects, and wholesale electricity prices. Without a quorum, FERC will be unable to issue decisions for any contested issue, including electric transmission lines, natural gas pipelines, and utility plans. Any new commissioner nominated by President Trump must be approved by Senate confirmation, which could take months. In the meantime, the 5-10 orders typically issued each day will backup and await new commissioners.
Prior to losing quorum, FERC approved proposals for the Rover Pipeline and the Atlantic Sunrise Pipeline. Also on Friday, FERC issued an order delegating additional authority to agency staff to allow operations to continue in the absence of quorum. “The Commission anticipates not having a quorum for an indeterminate period, but has a continuing responsibility to carry out its regulatory obligations under the Federal Power Act (FPA), Natural Gas Act (NGA), and Interstate Commerce Act (ICA), among other statutes,” the agency said in a statement. The order will allow agency staff to act on tariffs, rate filings, waiver requests, extensions of time, and uncontested settlements. However, the order does not allow FERC to issue certificates, new policies, or propose rulemakings.
With three empty seats available, President Trump has the opportunity to fill the majority of FERC commissioner members with pro-energy Republicans. Many expect Barry Smitherman, who has a background in both the electricity and oil and gas sector, to be nominated by President Trump to lead FERC. Smitherman was appointed by President Trump’s pick to be the secretary of energy, Rick Perry, to the Public Utility Commission of Texas in 2004, and became chairman in 2007. Smitherman was then named by Rick Perry to the Texas Railroad Commission, which regulates oil and gas, in 2011. Until a commissioner is nominated and approved, future decisions on pipelines will be on hold. Because of the high volume of orders, the natural gas and electric industries will surely be negatively impacted.