One of the many burning post-election questions we must now consider in the energy industry is what will become of the Federal Energy Regulatory Commission, its commissioners and its future role in national energy policy under the Trump administration? Under normal circumstances, the chairman and two commissioners would be Republicans. However, FERC currently has only a chairman and two other commissioners, all Democrats. What happens now?
First, let's consider who are and who will continue to be commissioners from a purely technical perspective. Under the Federal Power Act, FERC is to be made up of five members, no more than three of whom may be from the same political party. Appointments are made like cabinet-level appointments, with the advice and consent of the U.S. Senate. Due to recent departures of the two Republicans holding seats, however, the current commission is made up of only three commissioners appointed by President Obama, all of whom are Democrats. The current Chairman, Norman Bay, has a term that expires on June 30, 2018, Commissioner Cheryl LaFleur has a term that expires on June 30, 2019, and Commissioner Colette Honorable has a term that expires on June 30, 2017. The President has the right to designate any of the commission’s sitting commissioners to be chairman, or to retain Chairman Bay in that role. But he won't do that.
Looking back to the last transition of Presidents in 2009, Joseph Kelliher, appointed by President Bush to be FERC Chairman in 2005, was removed as chairman (but not as a commissioner) by President Obama and replaced by Jon Wellinghoff, who was at the time a sitting commissioner at FERC. The minority became the majority. This transition occurred about two months into President Obama's first term of office. Then-Chairman Kelliher thereafter immediately left FERC to return to private industry, notwithstanding the fact that he had additional time remaining on his five-year term.
President Obama had the benefit of being able to select from a sitting Democratic representative on the commission to be his chairman. With no sitting Republicans, President-Elect Trump will have no such benefit. He will immediately be charged with nominating and getting Senate confirmation of two entirely new Republicans to fill the two current vacancies, one of whom he will have the right to designate as the new chairman, replacing Chairman Bay in that role. While Chairman Bay has the right to remain "just a commissioner" for the remainder of his term, most persons (with the exception of Commissioner LaFleur) who lose the chairmanship have historically left the agency rather than remain in a diminished role. In that case, President-Elect Trump would have the opportunity to immediately fill three vacancies with Republicans.
It should also be noted that Chairman Bay's appointment to the commission was not an easy one, nor were other Obama appointees, including Ron Binz of Colorado, who failed to receive Senate confirmation and ultimately withdrew from consideration in 2013. Binz was attacked for having too aggressive stances that favored President Obama's climate change agenda.
Where will President-Elect Trump find his new commissioners and chairman? History over the past few decades points to three main pools of candidates. Selection from state public utility commissions is by far the most common route, with 11 of the last 17 commissioners over the last 25 years coming to FERC from positions within state commissions. Commissioners also come from other federal agencies or Congressional staff, or in a few instances, private industry. Remarkably, only two commissioners in the last 25 years have come from the staff of FERC itself, with current Chairman Bay being one of them. But in all potential candidate pools, there is usually some tie to the President or the party. Chairman Kelliher, for example, worked in the U.S. House Committee on Commerce in the 1990s on the Bush/Cheney Transition Team, and then as a senior policy advisor within the Department of Energy on the Cheney Energy Task Force. President-Elect Trump may have specific advisors or candidates in mind, but he has not publicly announced them as of yet.
Once President-Elect Trump identifies his candidates, they must be confirmed by the Republican-controlled Senate. While he will have an easier task than President Obama, one has to imagine that other appointees – perhaps a Supreme Court justice – may be of higher priority. In fact, according to a 2013 Washington Post article, 1,200 to 1,400 federal positions require some form of Senate confirmation. Given the recent history with FERC Commissioner appointments, it may take some time to fill the open positions. In that time, Chairman Bay or former Chairman (and now Commissioner) LaFleur may simply elect to leave public service. It is not inconceivable that Commissioner Honorable's term, which ends in June 2017, could also expire without an appointment for a new term. Based on these facts, it is quite possible that FERC could be left for a period of time with two or potentially one sitting commissioner. This would be unprecedented.
Eventually, the FERC leadership will be repopulated with three Republicans and two Democrats. When that happens, will FERC's focus change drastically? That also remains murky. FERC policy in the last several decades has been largely bipartisan. Many of FERC’s current initiatives, in fact, can be traced back to proposals first advanced under President Bush's administration. It was Republican Chairman Kelliher who was charged with implementing the Energy Policy Act of 2005, for example. That 2005 law brought us stricter enforcement of market manipulation regulations and penalties, mandatory electric reliability standards, and development of competitive energy markets. President-Elect Trump's America First Energy Plan would seem to indicate more development of infrastructure, renewed interest in clean coal power development, and enhanced use of American-produced natural gas resources to lower energy costs, but none of those visions would seem to contradict the types of issues and applications that FERC handles, and largely approves, today.