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FERC's Bay to resign, leaving commission's hands tied

In an announcement that most likely will leave FERC without the quorum needed to vote out orders for some time, Norman Bay on Jan. 26 announced that he will leave the agency on Feb. 3. In a move that was not made public until earlier that same day, Cheryl LaFleur took the agency's gavel from Bay on Jan. 23 after President Donald Trump appointed her acting chair.

Including Bay, FERC only has three sitting commissioners, all Democrats and the bare minimum needed to vote out orders under the agency's statutory quorum requirements. Since the agency has no sitting Republicans, LaFleur's appointment might have been expected given Trump's promises to rein in federal regulatory authority and Bay's former tenures as a federal prosecutor and head of FERC's enforcement office.

But Bay's decision to leave the agency in early February is a surprise, given that it will most likely leave the agency without the ability to act until Trump nominates and gains Senate approval of a Republican to fill one of the agency's empty seats. In the past, even after a president has nominated someone to a FERC seat, having the individual vetted and confirmed by the Senate has taken months.

And while, with the exception of LaFleur, most FERC chairmen who have been replaced with time remaining on their terms have left the agency quickly after being forced to step down, apparently none did so when it would leave the agency with only two sitting commissioners.

In a statement, Bay did not mention the possible ramifications of his decision to leave the agency before new members are seated. Instead, he focused on his accomplishments since joining the agency in August 2014 and becoming chairman in April 2015.

"It has been the greatest honor and privilege of my professional life to lead the dedicated and talented career staff at FERC," Bay said. "I am also grateful for my colleagues on the commission. When we succeed, we succeed because of our joint efforts, and my colleagues share in these accomplishments as much as I do."

Trump throughout his campaign and in the early days of his administration has railed against regulatory overreach, and recently told business leaders that he wants to cut the number of federal regulations by 75% or more.

The problem he had at FERC is that it has no sitting Republican commissioners. And since appointing new members and having them confirmed would take some time, Trump either had to let Bay continue to lead the agency or have one of the other two sitting Democrats fill the chair.

Trump chose the latter option, perhaps because of Bay's background and his desire to reform the government's regulatory approach. LaFleur also has led the agency before, initially as acting chairman from November 2013 to July 2014, and as chairman from July 2014 until April 2015 before she was succeeded by Bay.

In a statement, LaFleur acknowledged that FERC "is in a state of transition as we await nominations to fill vacant seats at the agency," but stressed the importance of continuing FERC's "work on the nation's energy markets."

After Bay's resignation announcement, LaFleur said in a second statement, "The Commission is working to get as many orders out as possible, to maximize the time we have with Norman Bay here. I am confident that, with the strong team that we have here at the Commission, we can continue to do our work. The Commission is also evaluating how best to do the work of the Commission going forward as much as possible after Commissioner Bay's departure. I expect there will be more to communicate on this in the coming weeks. That said, nominations for the three openings at the Commission would be very welcome, and I look forward to the day when we will have a full, five-member Commission working here again."

LaFleur, a former utility executive, joined the commission in 2010 and was sworn in July 2014 for a second term that expires in the summer of 2019.

Bay was nominated by former President Barack Obama to FERC in January 2014 and was confirmed by the U.S. Senate for a term that expires in June 2018. He served as a commissioner from August 2014 through April 2015, after which he took the agency's gavel from LaFleur before giving it back to her again on Jan. 23.

In a memo released before Bay's announcement, ClearView Energy Partners said it did not expect LaFleur to make any major chances to the agency's policy priorities before the new president's picks are seated at the commission. Instead, the analysts expressed more concern over FERC losing the quorum needed to issue orders, particularly those involving natural gas pipeline projects. That fear will now probably come true.

Looking more long term, the question is how much a Republican chairman will change FERC's regulatory approach. The agency has traditionally been apolitical, and Bay and his two fellow Democratic commissioners have strongly supported the development of new energy infrastructure, even in the face of unprecedented grassroots opposition to new gas pipelines and fracking, something that Trump also supports.

Trump also has indicated that he does not believe in climate change, and pledged to eliminate certain clean air regulations. Those regulations, however, are not promulgated by FERC. The current commission also has been extremely reluctant to expand its environmental reviews of new gas infrastructure projects despite pressure by opposition groups, and even the U.S. EPA, for it to do so.

But since Trump has also called for less regulation, how his presidency ultimately will play out in FERC's hallways is anyone's guess. One thing that appears most likely is that FERC regulatory activity will come to an immediate halt after Feb. 3 unless Trump and Congress somehow miraculously manage to seat a new member before then.