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White House ethics guidance unexpectedly stymies FERC's Glick

Highlights

Glick given incorrect recusal guidance

PJM market reforms proceeding could lose quorum

Washington — Just as a White House ethics waiver appeared to ease the risk of quorum lapses at the Federal Energy Regulatory Commission, clearing one member to participate on more orders, another commissioner has found himself steeped in recusal issues over an apparent misinterpretation of the Trump ethics pledge.

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This could prove challenging for PJM Interconnection stakeholders who had hoped to soon see a commission order establishing capacity market rules for the region (EL18-178). Reforms PJM filed last October to address state-subsidized generation, after FERC found existing PJM rules were unjust and unreasonable, have yet to come up for a vote, and the commission may have lost the necessary quorum of three members to advance the issue.

White House Senior Counsel Scott Gast on August 29 granted Commissioner Bernard McNamee a waiver from the ethics pledge governing executive branch appointees. The waiver cleared the commissioner to participate in proceedings involving clients of his former law firm.

Finding that McNamee's duties and role could not be adjusted or performed by someone else, Gast said it was "appropriate and in the public interest" to grant the waiver allowing "McNamee's participation in significant issues pending before the commission."

The waiver noted that more than two years had passed since McNamee worked at the law firm or served its clients. Further, a two-year waiting period from the time of appointment would already have lapsed had McNamee not taken a four-month break from federal service, resulting in the execution of a second ethics pledge that reset the clock.

The waiver was made public September 9. The following day, Commissioner Richard Glick, upon hearing of a potential new interpretation of the ethics requirement necessitating McNamee's waiver request, met with FERC's ethics official Charles Beamon.

MISSTATED GUIDANCE

In a statement Thursday, Glick said that Beamon had previously advised him that he would need to recuse himself from all proceedings in which his former employer, the energy holding company Avangrid, and its affiliates and subsidiaries were a party until February 5, 2018, marking two years from the date he left the company. After that date, Glick would only have to recuse himself from matters where he personally and substantially participated on behalf of Avangrid, Beamon had advised.

But on Tuesday Beamon realized this guidance was wrong as he had misstated the relevant provision of the ethics pledge. His new understanding was that the recusal requirement applied for two years from a commissioner's appointment to FERC, not two years from their exit from a prior employer.

Following that conversation, Glick and his staff ceased all work on matters tied to Avangrid and began working to identify proceedings where Avangrid had participated and Glick had already cast a vote, the statement said.

"I'm frustrated by the situation, and I'm trying to be as transparent as possible and will try to continue to be," Glick said in an interview Thursday, adding that once his staff completed their review, he planned to release a list of the proceedings on which he should not have voted. "This came as a complete surprise to me on Tuesday, so we're trying to rectify it as much as we can."

He said he believed the recusal mishap would not endanger the validity of any orders and the commission's decisions would remain legally valid.

BAD NEWS FOR PJM

As for any pending matters to which Avangrid is a party, the revelation could create a quorum problem, at least until November 29, when Glick would be freed from the more stringent recusal requirement.

This could further stall action on a long-awaited FERC order to address PJM's proposed capacity market design changes. Avangrid Renewables in 2018 intervened and filed comments in that proceeding, and a director with the company submitted testimony in a related paper hearing.

ClearView Energy Partners said in a research note Friday that FERC "needs to act this fall in order to allow parameters to be set for" the delayed 2022-23 capacity auction, "and to hold the one scheduled for May 2020 for the 2023-24 capacity year on time."

Asked whether he would seek a waiver as did McNamee, Glick said he was "torn" and still debating what action to take.

"I'm generally not favorable towards waivers," and never intended to seek one, he said. "On the other hand, I realize we need to keep the work of the commission going," and without a waiver, certain matters may be stalled due to a quorum lapse. "So I'm weighing those two right now. I haven't made a final decision yet."

-- Jasmin Melvin, jasmin.melvin@spglobal.com

-- Edited by Rocco Canonica, newsdesk@spglobal.com