Staff cuts at the US Energy Department under the Trump administration and threats to independent agencies such as the Federal Energy Regulatory Commission could cause problems for energy companies that value regulatory certainty, former leaders at the two agencies said April 3.
An executive order from President Donald Trump to have the White House and the Office of Management and Budget review any independent agency proposals and litigation over Trump firing two members of the Federal Trade Commission could result in the White House having much more influence on the makeup and policy direction of FERC, said Norman Bay, a former FERC chairperson during the Obama administration.
Bay, now head of the energy regulatory and enforcement group at law firm Willkie Farr & Gallagher, spoke at a meeting held by the WIRES Group, which advocates for transmission expansion. Bay was on a panel with Maria Robinson, former director of the DOE's Grid Deployment Office, and Craig Glazer, vice president of federal government policy at PJM Interconnection LLC.
Robinson, who was at the DOE during the Biden administration, mentioned the latest "deferred resignation offer" provided to department employees after an earlier request for staff at all federal agencies to resign but receive their salaries through the end of the fiscal year. "Our sense is a lot of people are going to take" the latest offer, Robinson said, which could present a future problem if personnel are not in place to carry out the Trump administration's goals.
The Trump administration's transmission policy preferences are not vastly different from the Biden administration's, Robinson said, noting that Trump mentioned grid expansion in an executive order declaring an energy emergency. But those grid expansion plans could be delayed if the DOE does not have sufficient staff to help carry them out, Robinson added.
FERC's current chairman Mark Christie in March said he had received no indication that Trump was planning to fire any commissioners and that the agency so far had been spared from major staff cuts. Three of the current five commissioners are Democrats.
However, Bay pointed out that a March 28 order from the US Court of Appeals for the District of Columbia Circuit concluded that the Trump administration was likely to succeed in showing that laws establishing removal protections for independent agency members are unconstitutional. Though the court case involves a member of the National Labor Relations Board who was abruptly fired by Trump in January, Bay said the fallout could result in a president having no constraints on removing members from FERC.
Federal law requires the president to demonstrate a cause for removing a member of most independent agencies such as the National Labor Relations Board, Federal Trade Commission, FERC and the Nuclear Regulatory Commission.
Bay expressed concern that if the Trump administration succeeds on its legal path, there could be a "revolving door of commissioners" at FERC based on who is in the White House. That would not be good for companies regulated by FERC, Bay said, explaining that they value regulatory certainty when planning investments that can reach billions of dollars.
The last thing the energy sector needs is policy "zig-zagging" based on different presidential administrations, Bay said.
Glazer asserted that policy changes at FERC are already happening due to changes in the commission's leadership, though Glazer did not cite any specific changes. "It is zig-zagging," Glazer said.
One case that Glazer might have been referring to involves the minimum offer price rule (MOPR) at PJM, which was adopted during the first Trump administration when Neil Chatterjee was chairman and then narrowed during the Biden administration when Richard Glick was chairman. The narrowed MOPR that addressed state-subsidized clean energy resources went into effect on a 2-2 vote at FERC and then was upheld by the US Court of Appeals for the 3rd Circuit in 2023.
In the first few months of the current Trump administration, advocates for coal-fired generation have broached the idea of having Trump use the Defense Production Act or Section 202(c) of the Federal Power Act to keep their power plants running. They would otherwise be shut down due to uneconomic market conditions.
Glazer said the Defense Production Act is up for reauthorization by Congress this year, which might provide an opportunity to improve procedural hurdles that limit its use.
Among the steps required for the secretary of energy to invoke Section 202(c) of the Federal Power Act are having power plant owners bring contracts to the DOE for review and a 90-day authorization that would need to be renewed, Glazer said. Coal plants in PJM are currently seeing higher capacity prices, reducing the impetus for a "short-term fix" through the use of Section 202(c), Glazer said.
