American Gas Association vs. Federal Energy Regulatory Commission

February 5, 2010 by Andrew Soto · Leave a Comment
Filed under: energy

On January 22, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion holding that the Federal Energy Regulatory Commission (FERC) failed to respond to the reasonable concerns of a dissenting commissioner when it revised the financial reporting forms interstate pipelines are required to file. American Gas Association v. FERC, No. 08-1266 (D.C. Cir. decided Jan. 22, 2010). The court held that while FERC is not required to agree with arguments raised by a dissenting commissioner, it must, at a minimum, acknowledge and consider them, which FERC failed to do. The court remanded the case back to FERC, noting that while FERC could again conclude that the burdens of additional reporting outweigh the benefits, it must do so in a reasoned decision that acknowledges the concerns raised by the dissenting commissioner.

As several have suggested, the significance of this ruling is far greater than the individual FERC proceeding involved and even greater than the case AGA had thought it was bringing to the court. On its own, the court focused on FERC’s failure to address the arguments raised in dissent by then-commissioner, now-chairman Jon Wellinghoff. This case will stand as precedent for all Federal agencies that, as a matter of administrative law, agencies must address the arguments raised by their dissenting commissioners. Failure to do so will make their orders vulnerable to a court challenge.

A recent article in Inside FERC (“Court stance on FERC dissents seen as unworkable”) suggests that the ruling could adversely impact the decision-making process at FERC. The article noted that, unlike courts, dissents in FERC cases are normally not circulated in advance. Former FERC Chairman Joseph Kelliher was quoted as discussing the difficulty of requiring commissioners to supply a dissent in advance and the potential damage to comity among the commissioners of “gamesmanship” associated with the timing of supplying the dissent.

I take a contrary view. I believe that the ruling will actually strengthen the decision-making process at FERC. In the article, both Kelliher and former FERC general counsel William Sherman acknowledged that even though dissents are not normally circulated in advance, the views of a dissenting commissioner are generally known before the order is voted on. Therefore, the ruling will simply require the majority to pay a little more attention to them. During the deliberative process, the chairmen and staff will need to know when a commissioner will dissent and what the fundamental concerns are. That can only help the process. When I worked for former FERC Chairman Pat Wood, it was part of my job to know when a commissioner would dissent and what the dissent would say. Pat told me he wanted to know because “I may agree with them.”

The concerns that have been raised regarding the potential for delay or gamesmanship can be easily addressed. First, problems can be fixed on rehearing. A large part of FERC’s vulnerability in the orders that led to the court’s decision stemmed from the fact that FERC waited until the rehearing order to even address AGA’s arguments, and it was the rehearing order to which Wellinghoff dissented. FERC can reduce the impact of this ruling if it adequately addresses the arguments that are raised the first time around. The dissent will have been revealed initially, which FERC can address on rehearing.

Second, even if the press of business prevents full consideration of all of the arguments initially and a dissent surfaces in a rehearing order, voluntary remand is available. In any court case, FERC has an opportunity to seek a remand of the orders for which judicial review is sought in order to further consider them and even provide additional support and reasoning for its decisions. The FERC solicitor can review the orders that have been taken up and, if there is a dissent, make a determination if the arguments were adequately addressed. If additional reasoning is needed, FERC can seek a voluntary remand.

In the end, the court’s opinion should stand for the proposition that an agency must adequately justify its decisions, even when the challenge comes from one of its own commissioners. The outcome of the court’s opinion should be better, more well-reasoned agency decisions.

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Tags: ferc

Welcome John Norris to the Federal Energy Regulatory Commission

January 7, 2010 by Andrew Soto · Leave a Comment
Filed under: energy

Before it adjourned on December 24, 2009, the U.S. Senate confirmed John Norris to serve on the Federal Energy Regulatory Commission (FERC). Norris, a former chairman of the Iowa Utilities Board, has recently been serving as chief of staff to Secretary of Agriculture Thomas Vilsack. Norris fills the seat vacated by former FERC Chairman Joseph Kelliher.

The commission comprises five members who serve staggered, five-year terms. No more than three commissioners may be of the same political party. With Norris’ confirmation, FERC now has four commissioners: Phil Moeller, a Republican, has been on the commission since 2006, and his term expires this year (June 30, 2010); Marc Spitzer, also a Republican, joined the commission shortly after Phil Moeller, and his term expires next year (June 30, 2011); John Norris, a Democrat who was recently confirmed, will serve a term ending June 30, 2012; and Jon Wellinghoff, also a Democrat, serves as chairman of the commission, and his term will end June 30, 2013. There is an open seat with a term expiring June 30, 2014. This seat was recently vacated by Suedeen Kelly, who had been on the commission since 2003 but declined President Obama’s invitation to serve for another five years.

Serving as a FERC commissioner is a demanding job – the workload is heavy, the policy calls are significant and the demands on one’s time from interested parties wanting to hear and express views are never ending. There should be five commissioners to spread the work around. While the commission can function with four and even three commissioners, the decision-making process is improved when different perspectives and opinions are brought to bear on the myriad policy calls that arise on a daily basis. Having only four commissioners means that every decision must command a three-fourths majority, and although the issues with which FERC deals do not usually break along partisan lines, having two Republican commissioners and two Democratic commissioners only invites partisan considerations.

I look forward to John Norris’ term on the commission and wish him the best. I hope that President Obama soon nominates someone of high quality to fill the open seat and that the Senate confirms him or her shortly thereafter. To be truly effective the Commission should have a full complement of five commissioners.

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Tags: ferc

Natural gas key to Wellinghoff vision

May 5, 2009 by Paula Gant · Leave a Comment
Filed under: Natural Gas, energy

The Chairman of the Federal Energy Regulatory Commission, Jon Wellinghoff, recently made news by suggesting that there may never be a need for a new nuclear or coal power plant to be built in the U.S. Chairman Wellinghoff envisions a future in which renewable resources such as wind, solar, and hydrokinetics are backed-up by natural gas-fired generation — central and distributed facilities — which will provide load-response services. If this potential were fully realized, coal and nuclear could theoretically be priced out of the market, potentially making baseload generating capacity a thing of the past. A robust electric transmission system, demand response programs — “smart” grid — and increased energy efficiency would be an important part of the picture. Chairman Wellinghoff raises a very important point regarding the economics that support this vision — expectations of ever-higher construction costs and increased siting challenges associated with new coal and nuclear plants are changing thinking about the relative cost equation comparing traditional central generation plant and distributed resources — renewable or other. This shift in thinking on the part of leading policymakers is representative of the sea change that is occurring in thinking about how and where we produce energy.

Natural gas will play an important role in enabling this “smart” vision whether through traditional uses in space and water heating, or in the production of electricity inside of or nearer to homes and businesses. As part of the state-wide New Jersey Clean Energy Program, natural gas utilities in that state administer Pay for Performance, which provides incentives of up to $1 million to industrial and commercial customers for purchasing and installing Combined Heat and Power (CHP) units. This emerging technology is expected to become increasingly prevalent as an innovative way to enhance energy efficiency through recovery and productive use of waste heat, thus reducing both demand on the electric power grid and carbon dioxide emissions. And although it’s not yet ready for the mass market, even micro CHP (the smaller version designed for residential use) is beginning to earn some attention.

In short, Chairman Wellinghoff is definitely on to something “smart” and natural gas will be key to his vision becoming a reality.

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