‘Every President’s Second Choice’

By Michael Brooks

WASHINGTON — FERC Commissioner Cheryl LaFleur last week provided a clip show of anecdotes from her tenure at the commission, giving attendees at the Energy Bar Association’s annual meeting an insider’s view of the nearly constant change of the past several years.

The May 7 speech was a farewell address to the bar from LaFleur, whose term ends June 30. Although she was not nominated for another term, LaFleur told the audience she intends to stay on past June; she’s allowed to stay until the end of the year or a replacement is appointed. (See LaFleur Announces Departure from FERC.)

LaFleur’s luncheon speech was a reminder of just how much turnover the commission has seen in less than a decade. During her time, LaFleur has served as acting chairman twice, the official chair for nine months and the lone commissioner for a month.

In contrast to Commissioner Bernard McNamee — who the day before gave the EBA the same colorless keynote that he’s delivered at other conferences — LaFleur was loose, sipping a glass of wine and cracking jokes, often at her own or the commission’s expense.

She began her tenure in July 2010 after serving as executive vice president and acting CEO of National Grid. “I knew what FERC did; I knew its jurisdiction of course. I had read plenty of FERC orders; I knew enough to read them from the back.”

She arrived without any agenda, personal or political, she said. “I didn’t really have any clearly developed policy agenda I was there to do, other than a vague sense that I could add value on reliability because I had run a company. So, when people said, ‘What are you going to focus on?’ The very first week I would say, ‘Oh, uh, a lot of reliability.’”

LaFleur was also candid about her reactions to some of the commission’s most tense and uncertain moments, lamenting how the country’s partisan divide slowly began to affect the commission’s work. Nevertheless, she said, the commission’s staff remained diligent and dedicated.

She recalled an article listing the top five candidates to replace Chair Jon Wellinghoff in 2013. “And I was not mentioned as a top-five candidate, even though I was one of two sitting Democrats at the commission. Hello, Rodney Dangerfield.” Then, after President Barack Obama nominated Ron Binz for the chair, “[Commissioner] John Norris went postal because he wasn’t nominated.”

When Binz’s nomination was withdrawn in the face of opposition from the coal industry, “it seemed like it was getting more political — at least what we thought was political at the time,” LaFleur said. (See “Echoes of Binz,” Senate Confirms McNamee to FERC.)

In November 2013, 45 minutes before the start of the commission’s monthly open meeting, LaFleur received a call from the White House telling her that Obama had named her acting chair. At the end of the meeting, Wellinghoff announced his departure and LaFleur’s promotion. “And the looks on the people in the room: ‘Oh my God, something actually happened at a FERC meeting!’”

She “had zero transition with Jon,” who left that day. Fortunately, she said, senior commission staff helped familiarize her with her new duties.

Months later began what LaFleur called a “very tumultuous” period. Obama nominated Norman Bay, then director of the commission’s Office of Enforcement, to be chair; a memo detailing a FERC analysis of the most critical 30 substations in the country was leaked to The Wall Street Journal; and the end of LaFleur’s term was coming up, leaving her to run the commission while she wondered whether she would be reappointed.

“There were some really awkward moments,” she said. “I remember the open meeting when I congratulated Norman on his nomination. You could just hear a pin drop in the commission meeting room.”

Obama did nominate her for a second term, but Bay’s nomination, like Binz’s, was controversial. Bay and LaFleur appeared before the Senate Energy and Natural Resources Committee together in a joint confirmation hearing, where several senators said LaFleur should have been named chair.

“We had to field questions about each other,” LaFleur said. “And I thought that was the height of the craziness, but then it got crazier.” (See Analysis: LaFleur Cruises, Bay Bruises in Confirmation Hearing.)

In a deal between the White House and the Senate, LaFleur was named the official chair for nine months while Bay served as a commissioner.

Trump’s Arrival

Bay took the gavel in April 2015. “For about a year and half after that, life seemed pretty settled,” LaFleur said. “Whether I was chairman or Norman was chairman, the work kept going.” With the addition of Commissioner Colette Honorable in December 2014, the commission was fully staffed.

However, the commission’s ranks began to dwindle with the departures of Phil Moeller in fall 2015 and Tony Clark 11 months later. “It really didn’t seem like a big deal at the time, but obviously it was in retrospect. As we went into the [2016 presidential] election, a lot of the press talk and industry gossip was about who Hillary Clinton would make chairman. …

“Of course, I was never mentioned. I knew I would never be mentioned.

“So then came the election,” she said, taking another sip of wine. The commission had scheduled a technical conference on energy storage for the day after the election. “So, we’re sitting in the commission meeting room trying to focus on some pithy storage issues, thinking, ‘What is going to happen? What’s going to happen?’”

After President Trump’s inauguration, LaFleur said a messenger from the White House dropped off a letter at the front desk of FERC making her the acting chair once again. “I am truly every president’s second choice. … It was just bizarre.”

Bay announced his resignation the next day, and the commission had nine days before he left to vote on as many as orders as possible before it lost its three-member quorum. Trump nominated Robert Powelson and Neil Chatterjee in May, and they were swiftly advanced to the Senate floor by the ENR Committee. LaFleur said she and Honorable were thrilled, but the nominations languished for almost two more months, during which Honorable departed at the end of her term, leaving LaFleur as the only commissioner.

“In early August, I finally gave up [waiting for the Senate to vote] and took a vacation.” While she was away, Powelson and Chatterjee were confirmed. After Chatterjee was sworn in, she received another call from the White House informing her that he would be the new chair. “So, I stayed on vacation,” she said.

In comparison to Wellinghoff’s departure, the transition from LaFleur to Chatterjee was well coordinated, aside from “one unusual change which was more administration involvement in selecting senior staff,” she said. “But we took it in stride; we were excited to be back in the saddle.”

The new chief of staff, Anthony Pugliese, came to FERC after a stint at the U.S. Department of Transportation as a member of President Trump’s so-called “shadow cabinet.” (See “Mum on White House Input on Staff,” FERC Chair Praises Perry’s ‘Bold Leadership’ on NOPR.)

‘Rifts Started to Appear’

The quips dissolved and the room became silent as LaFleur spoke about the Department of Energy’s 2017 Notice of Proposed Rulemaking calling for RTOs and ISOs to compensate generators with 90 days’ worth of on-site fuel their full operating costs. The NOPR “hit [FERC headquarters at] 888 First St. like a thunderclap,” LaFleur said. “We were already working as hard as we could to catch up, but we had to spend most of the fall grappling with the NOPR.

“It was very divisive. And it soaked up a lot of time and energy that we could have directed at the backlog of policy dockets that we had lined up. … I was really happy when FERC unanimously rejected the NOPR in January 2018. That was what the record required, but it also protected FERC’s independence.” She praised Powelson “for holding his ground on his pro-market views” and then-Chair Kevin McIntyre “for bringing us together.”

In May 2018, however, “rifts started to appear on the commission, and I fully acknowledge that I was a part of those rifts.” The three Republican commissioners voted to narrow the circumstances under which FERC would estimate greenhouse gas emissions from natural gas pipeline projects. The decision was part of its rejection of a request for rehearing of its approval of Dominion Energy Transmission’s New Market Project pipeline. (See FERC Narrows GHG Review for Gas Pipelines.)

The new policy reversed the commission’s practice since late 2016 of including more information on upstream and downstream GHG emissions in its pipeline orders.

“I’ve thought a lot about what happened, and in part, I think the polarization of Washington, D.C., and societal rifts on big issues have sort of spread to 888 First St., especially the profound societal disagreement about climate change,” she said.

“Throughout this period … I tried to keep my same regulatory philosophy. I’m still trying to decide case by case, still trying to get things partly my way and still trying to find a middle where I can, if there is a middle. … I’m trying to keep our disagreements about the way we conduct our environmental reviews from forcing me to dissent every single time, even if I have to supplement the climate analysis myself.

“I expect that the courts will ultimately require the commission to do more climate analysis,” she added.

Another Reset

The most consequential event of 2018 came when McIntyre — who had been absent from the commission’s open meetings since July as he battled brain cancer — relinquished the chair back to Chatterjee, LaFleur said. McIntyre succumbed to his illness and died Jan. 2.

“The loss of Kevin was a major blow to the agency on both a personal and professional level,” LaFleur said. Coupled with Powelson’s departure last summer, “we had to reset again, and the reconstituted FERC that started in December 2017 never really fully had a chance to get its bearings.”

“In retrospect, it’s hard to deny the collective impact of all these events, particularly the continued changes in commission membership and leadership, and our underlying policy disagreements,” she said. “It’s hard to deny that that hasn’t had a significant impact on our work as a commission.”

LaFleur acknowledged that since the loss of McIntyre and the arrival of McNamee, the commission has seen more dissents, separate statements and partisan splits. She said she has written separately 36 times in 2018 and 10 times in 2019.

She also revealed that “even some less prominent orders that have nothing apparently to do with climate have gotten stalled because individual commissioners are too dug in on something to agree on language. And this has happened far more frequently than in the past.”

But she said that the splits along party lines only “give the appearance that people are voting by party philosophy and not individual views.” She also lamented the lack of certainty caused by the splits. “If you keep changing your positions by who’s in the seats, it doesn’t promote regulatory continuity and regulatory certainty for the regulated community.”