When Should a FERC Commissioner Be Recused?

March 21, 2019

Commissioner Bernard McNamee may have to recuse himself from FERC issues concerning fuel security and potential subsidies for fossil fueled generation facilities, due to his prior involvement in such matters.  Commissioner McNamee’s extensive involvement at the Department of Energy (“DOE”), and statements he made before he became a Commissioner, appear to require that he not be involved in adjudicating relevant issues in FERC’s current proposed rulemaking on fuel security.

Docket No. AD18-7 is entitled “Grid Resilience in RTO/ISOs”.  This current proceeding shares many of the same issues with an earlier FERC proceeding in Docket No. RM18-1, which was entitled “Grid Reliability and Resilience Pricing” (the “DOE NOPR”).  In both of these proceedings, FERC is grappling with complex questions involving whether certain electricity generation facilities are required to ensure the reliability of the electricity grid.  Some have argued that such reliability concerns require making exceptions to the FERC-approved normal energy and capacity market pricing tariff procedures.  One approach that has been proposed, for example, would enable “resilient” generation resources (such as nuclear facilities or coal generation facilities that have on-site storage of fuel, so-called “fuel secure” generators) to receive out-of-market payments in order to ensure that they remain economic.

Commissioner McNamee signed the DOE transmittal letter that initiated the DOE NOPR while he worked as the Deputy General Counsel at the DOE in 2017.  On January 8, 2018, FERC unanimously voted to terminate the DOE NOPR that had been submitted to the Commission by the Secretary of the DOE.  FERC, however, initiated a new proceeding, Docket No. AD18-7-000, to specifically evaluate the resilience of the bulk power system in the regions operated by regional transmission organizations and independent system operators.  Requests for rehearing of FERC’s 2018 decision were filed by several parties; FERC has not yet acted on these rehearing requests.

During the Senate hearing held to confirm Commissioner McNamee, 17 Senators signed a letter questioning whether he could be an impartial judge of FERC resiliency proceedings given that he had: (1) participated in drafting the DOE NOPR; and (2) defended the DOE NOPR at a regulatory conference.  Commissioner McNamee has also acknowledged that before being confirmed as a Commissioner, he had a role in the development of the proposals that led to the DOE NOPR.  The Senators requested that he recuse himself from matters that involved resiliency and fuel security, to avoid the appearance of bias in this matter. Although  Commissioner McNamee confirmed in a letter that he would recuse himself from the DOE NOPR matter, he stated that he would not recuse himself from the broader FERC resilience docket unless the records in the DOE NOPR and Docket No. AD18-7 “replicate or closely resemble” one another.  Commissioner McNamee also pledged to continue to seek the guidance of a FERC ethics officer.  As of March 13, 2019, Commissioner McNamee reportedly told the attendees at the CERAWeek conference in Houston that he was still working with FERC ethics officials to determine if he will be able to participate in Docket No. AD18-7.

It is important to understand that recusal is required in situations that do not necessarily involve actual bias.  Instead FERC’s recusal rules are based upon avoiding the “appearance of bias” by a FERC Commissioner due to the individual’s involvement in a related matter.  As detailed in the December 6, 2018 Comments filed by the Harvard Electricity Law Initiative in Docket No. AD18-7, a Commissioner is disqualified from adjudicating a matter if either: (1) the Commissioner worked in a different capacity on the relevant matter; or (2) the Commissioner has at least appeared to have prejudged specific facts that are at issue in the matter.  Recusal is required to protect against the appearance of bias from the perspective of a reasonable observer.  However, the decision to recuse is an individual’s choice based on their conscience, regardless of possible advice to the contrary by ethics counsel.

If Commissioner McNamee fails to recuse himself from the subject fuel security proceeding, his participation in a final Order could have serious consequences.  If Commissioner McNamee participated in Docket No. AD18-7, in theory a federal appellate courts could invalidate such a decision on procedural grounds.  Thus, out of an abundance of caution, it would be wise for Commissioner McNamee to carefully consider whether to recuse himself from taking any part in FERC’s decision in Docket No. AD18-7.

This Eckert Seamans Energy Blog is intended to keep readers current on matters affecting businesses and is not intended to be legal advice. If you have any questions, please contact Charles Zdebski at (202) 659-6605 – czdebski@eckertseamans.com.

Share This Post