The resignation of Federal Energy Regulatory Commission (FERC) Chairman Norman C. Bay leaves the FERC with only two Commissioners serving on the five-member commission.
“The Commission requires a quorum of three members to issue substantive orders, regulations, and policy initiatives,” said Jay Ryan, a partner with Baker Botts based in Washington. “Given the backlog of Trump Administration nominees currently pending before the Senate, it could take several weeks or months for a new FERC Commissioner to be nominated and confirmed,” added Mr. Ryan.
As a result, the FERC will not be able to resolve pending proceedings, conduct other official business and could fail to meet key deadlines established in federal statutes. The lack of a quorum is also likely to impact the FERC’s oversight and enforcement activities, since the FERC will be unable to issue orders approving audit findings, settlements of investigations, and orders to show cause.
“This creates a huge potential challenge for regulated utilities and energy companies. For example, under the Natural Gas Act and Federal Power Act, regulated companies are required to file changes to rates and tariffs 30 and 60 days, respectively, prior to the date upon which they become effective,” said Ryan.
“However, if the FERC fails to act within the time that those rates go into effect, the changes become effective automatically and if the FERC wishes to order further changes, it would have to do so under statutory provisions that place a heavier burden on the agency. Further, any requests for rehearing of the FERC’s orders under those statutes that are not acted upon by the FERC within a prescribed period are automatically denied,” added Ryan.
“One of the more significant effects that the lack of a quorum could have is in delaying the approval of any natural gas pipeline projects currently pending before the agency. The FERC staff can continue to prepare environmental documents and otherwise develop the record in major pipeline construction project proceedings,” said Brooksany Barrowes, a Washington based partner.
“Only the Commissioners, acting on the authority of the FERC, can currently approve those projects. Given the need for expanded gas infrastructure and the narrow construction window many projects face, this could be a major issue,” added Barrowes.