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Trump nominates FERC lawyer James Danly to fill 1 of 2 open seats

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James Danly has been nominated for a seat on the Federal Energy Regulatory Commission.

Source: Federal Energy Regulatory Commission

President Donald Trump on Sept. 30 nominated Federal Energy Regulatory Commission General Counsel James Danly to fill one of the two vacant seats at the agency.

The move represents a departure from a tradition established by previous administrations of pairing a Republican with a Democrat to ease the U.S. Senate confirmation process when FERC has two open seats. Past presidents have held to the practice in part because no single political party is allowed to control more than three seats on the five-member commission, which was designed to serve as an independent, quasi-judicial energy regulator.

A White House spokesman was not immediately available Sept. 30 to say whether the Trump administration would soon announce a Democratic nominee to FERC.

Danly's confirmation would add another Republican to FERC's current 2-1 GOP majority, potentially giving the commission even more leeway to greenlight a raft of proposed natural gas infrastructure projects. His presence could also allow the commission to act swiftly on an already delayed PJM Interconnection capacity proceeding that was further postponed by the unexpected recusal of Democratic Commissioner Richard Glick.

Danly was tapped as general counsel in September 2017 by FERC Chairman Neil Chatterjee, who was an aide to Senate Majority Leader Mitch McConnell, R-Ky. A distinguished former U.S. Army officer, Danly served two deployments in Iraq and received a Bronze Star and Purple Heart. He came to FERC from the energy regulation and litigation group at Skadden Arps Slate Meagher & Flom LLP. Before the law firm, he served as a law clerk to Judge Danny Boggs at the U.S. Court of Appeals for the 6th Circuit, and before that was a managing director of the Institute for the Study of War, a military think tank in Washington, D.C. He has also served at the Council on Foreign Relations.

If confirmed, Danly would give FERC the three-member voting quorum it needs to act on natural gas and power sector proceedings if Glick or another commissioner decides to not participate. In a series of dissents, Glick has argued that orders granting certificates for new pipeline construction projects and LNG terminals violated the Natural Gas Act and the National Environmental Policy Act by failing to adequately consider the associated greenhouse gas emissions and consequences for climate change.

Trump was reportedly on the cusp of nominating U.S. Department of Energy counsel David Hill to fill the open seat, which was vacated when ailing FERC member Kevin McIntyre died in early January following a battle with cancer. But Hill's nomination was reportedly derailed over his criticism of a DOE proposal to subsidize uneconomic coal- and nuclear-fired power plants at risk of retirement.

"With the 2020 election in the headlights, we expect Trump will once again push FERC and the DOE to implement coal-friendly policies," analysts at Height Securities said in a Sept. 17 note to clients about the prospect of Danly's nomination.

In unanimously rejecting the DOE proposal, FERC initiated a separate proceeding to assess the resiliency of the nation's bulk power system. Commissioner Bernard McNamee, who helped author the failed coal and nuclear bailout plan as DOE general counsel, has pledged to recuse himself from the resiliency docket if it begins to closely resemble the earlier proposal that FERC voted down. At its current stage, however, that docket is narrowly focused on defining what the term "resiliency" means and a separate rulemaking may be required to drive value to at-risk coal- and nuclear-fired units, Height Securities noted Sept. 17.

While Republicans hold a 53-47 majority in the Senate, Danly's confirmation before the end of the year is not assured. The upper chamber's fall legislative calendar is primarily devoted to funding the federal government, and any senator could seek to slow down the confirmation process by exercising a hold.

If Danly is not confirmed by Dec. 31, Senate rules dictate that his nomination must be returned to the White House. But in that scenario, he would not need to sit for a second confirmation hearing before the GOP-controlled Senate Energy and Natural Resources Committee, if the committee holds a nomination hearing before the end of 2019. The Senate energy committee has jurisdiction over FERC nominations.

U.S. Sen. Joe Manchin, D-W.Va., ranking member of the Senate energy committee, said in May that he believed Democratic leaders have settled on lawyer Allison Clements as their party's pick to replace outgoing Democratic FERC member Cheryl LaFleur, who vacated the commission's other open seat at the end of August.

Spokespeople for Manchin and Senate Energy and Natural Resources Committee Chairman Lisa Murkowski, R-Alaska, did not immediately respond to requests for comment on Danly's nomination and whether they would move his nomination ahead without a Democratic pairing.