Former FERC leaders cite policy, public confidence risks ahead of Supreme Court ruling

Five former US Federal Energy Regulatory Commission chairmen aired concerns May 20 about the stability of future energy policy and public confidence in the regulator's decisions, as the US Supreme Court nears a pivotal decision for independent agencies.

By late June, the high court is slated to decide whether to overturn a 90-year-old precedent that insulates members of independent agencies, including FERC, from at-will removal by the president.

Should the high court's ruling extend to the energy regulator, "FERC will become more like [the Environmental Protection Agency]," Joseph Kelliher, who led the commission from 2005 to 2009, said.

Kelliher spoke on a bipartisan panel of former FERC chairmen at the Future of Energy Conference held at the William & Mary Law School's Center for Energy Law and Policy.

The contrast between FERC and the US Environmental Protection Agency is "extreme," he said. FERC is more committed to merit-based decision-making, while the environmental regulator is more results-oriented, with policies swinging between administrations, he said.

When there is a change in administration, "the EPA administrator's first declaration is 'I want to reverse everything my predecessor did over the last four or eight years," Kelliher said. The EPA loses more cases in appeals court, he said, because the court knows the EPA is politicized to a degree.

A loss of independence could mean party loyalty will overshadow other qualifications in the selection of FERC commissioners, and investment in capital-intensive industries could be discouraged, Kelliher said.

Former Chairman Richard Glick said one of his great concerns stems from a 2025 White House executive order that said that every agency commissioner has to follow the legal interpretations of the president or the attorney general. This could take away the essential mechanism of four or five independent commissioners and allow the White House to dictate direction, he said.

While Glick said FERC appears to be making its own decisions, he suggested that President Donald Trump having fired commissioners at other federal agencies could have a "chilling effect."

"If you are a commissioner, if you're going to write a scathing dissent about something, maybe you think twice about it now," Glick said. "Those dissents are important. They're important for judicial review."

Former Chairman Mark Christie, said his fear is the public could lose confidence that FERC's decisions in major rate cases or high-visibility mergers are being made observing ex parte rules restricting outside communications, and based on the record in a case, "not because you got a call from the White House, not because you got a call from the Department of Energy."

"I think that is one of the big fears I've got is the public confidence in an agency that basically transfers trillions of dollars of wealth every year," Christie.

Former Chairman Willie Phillips described the matter before the Supreme Court as striking at the heart of the framing and structure of the commission: Why Congress established FERC as a multimember agency with staggered terms; why commissioners are appointed by one body and confirmed by another; and why FERC decisions are directly reviewed by appellate courts.

"They designed it with the unique American instinct in mind that you don't have too much power concentrated in too few hands," especially when dealing with billions of dollars of investment, Phillips said.

Former Chairman Neil Chatterjee said he learned from his mistakes after he initially handled his position as acting chairman the way a politician would.

"I found myself in a place where this was the prima facie case of the White House putting pressure on an independent agency like FERC to take an action that was in the interest of their furthering their agenda," he said. The commission later unanimously rejected the US Department of Energy's proposed rule that would have supported aging coal and nuclear units in organized markets.

Chatterjee also disavowed his prior criticism of Glick's conversations with the Biden White House that had drawn scrutiny from conservative commentators. Glick has said such conversations were informational and maintained strict guardrails against discussing pending matters before FERC.

"I had very similar conversations when I was chair of the agency," Chatterjee said. "It was all politics and it was nonsense," said of his own prior criticism.

Notably, Chatterjee disagreed with Christie and others on the panel about the importance of limiting ex parte communications at FERC.

"FERC staff is on Twitter 24/7," Chatterjee said. "I think it is absolutely ridiculous, this idea that we have to have these rigid structures in place that if you have a conversation with the agency in a quasi-judicial matter, that it has to be captured in the docket so that all parties to the docket can review it."

Overall, however, Chatterjee praised FERC as being a "beacon of stability in what has been an otherwise volatile regulatory landscape" for roughly the last 15 years.

"I am now an investor where I have deployed capital, and I have to be honest with you, it is maddening to try to make investment decisions, trying to peg them to the political pendulum swinging wildly back and forth," said Chatterjee, who is currently chief of government affairs at Palmetto, a clean tech company.