Breaking News: NEXUS Seeks Approval Before Bays Departure
Yesterday, FERC Chairman Norman Bay announced his resignation following the appointment of Cheryl LaFleur as active Chairman. Bay's resignation will be effective Friday, February 3, 2017. Following Bay's resignation, only two commissioners will remain, stalling the commission's efforts. According to the section of U.S. Code establishing the FERC, in order for the FERC to transact business, a q uorum of at least three members must be present in order for the Commission to conduct business.
What does this mean for natural gas pipeline projects? Until a new Commissioner is appointed, which could takes weeks or months, the FERC can not grant certificates. And for projects, such as Rover, Nexus, and Atlantic Sunrise, that have already seen significant delays to their scheduled timeline, the lack of a quorum could be detrimental to the project's marketability. In fact, moments ago, NEXUS Gas Transmission has already filed a letter on the docket requesting that the Commission approve its project before Bay's official resignation on February 3. But FERC staff may continue issuing letter orders that addresses company requests, including, for projects that have received FERC approval, notices to proceed with construction.
Based on our research, since 1977, when the Federal Power Commission was reorganized as the FERC, there has never been a period where the Commission has had less than three commissioners, despite various unanticipated resignations incident to changes in the presidential administrations in past years. Historically, when a Commissioner announces his or her resignation, there has typically been a new appointee waiting in the wings. In 2006, when Nora Mead Brownell resigned from a three member commission that included Suedeen Kelly and Joseph Kelliher, new Commissioner Marc Spitzer was sworn in the very same day she left. On the last day of Ms. Brownell's tenure, July 20, 2006, the FERC rushed to approve certificates on seven pending dockets. The Commission did not issue another certificate until August 9th of the same year.
In 2001, when Democratic FERC Chairman James Hoecker resigned in January following the inauguration of Republican President George W. Bush, the Commission was left with a three person Commission until June, when Republicans Pat Wood and Brownell were sworn in. In a similar scenario, the Security Exchange Commission (SEC), another independent agency, issued a Final Rule in 1995 providing that even one or two Commissioners would constitute a quorum. However, such a rule was possible only because the SEC's enacting legislation did not address the establishment of a quorum. The Commission's Continuity of Operations Plan does provide that, in the event of an emergency in which a quorum of Commissioners capable of acting cannot be reached, authority can be delegated to commission staff. However, it is not clear that the present situation constitutes such an emergency.