That likely is a topic currently being discussed within FERC, the NRC, the CFTC, and the SEC, the main agencies overseeing energy companies. All four agencies are operating with just three Commissioners, rather than the typical five. Three is the minimum number for a quorum at FERC and the NRC. The CFTC and the SEC have a little more breathing room—their regulations permit a quorum of two Commissioners in certain situations.
For all four agencies, recusals by the remaining Commissioners for perceived conflicts of interest could leave the agencies unable to authorize critical rules or enforcement proceedings. Any action voted on by only two FERC or NRC Commissioners would contravene the mandate that “a quorum for the transaction of business shall consist of at least three members present.” 42 U.S.C. § 7171(e); 42 USC § 5841. Failure by the CFTC or the SEC to secure a quorum of two means that a single Commissioner authorized the decision. Such action likely would run afoul of a recent D.C. Circuit decision finding the structure of the Consumer Financial Protection Bureau, which is headed by a single person, to be unconstitutional. See PHH Corp. v. CFPB, No. 15-1177, Oct. 11, 2016. The court held that independent agencies require the checks and balances of multiple commissioners. The court rejected the notion that eventual judicial review of the agency’s decision obviates the need for more than one Commissioner to participate in the decision. Id. at 7, 62-63. The decision also calls into question the NRC’s contingency plan to mitigate the loss of quorum through a delegation of authority, in which authority to carry out all Commission functions, should the absence of a quorum arise, is delegated to the Chairman (or, if the Chairman is incapacitated or the position unfilled, the longest-serving Commissioner). Notice of Delegation, 60 Fed. Reg. 34561 (July 3, 1995).
Given the quorum requirement and the PHH Corp. v. CFPB decision, Commissioners may wonder if they could decide not to recuse themselves for the sake of preserving a quorum. If a Commissioner, or a close relative or business partner, has a direct financial interest in the matter before the agency, the answer is no. See 18 U.S.C. § 208(a). On the other hand, if the ground for recusal is an appearance of potential bias, then an exception, dubbed the rule of necessity, may allow the Commissioner to participate in the decision.
Regulations prohibit agency officials from participating in a matter where “the circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter.” 5 C.F.R. § 2635.502. Under subsection (d), however, an agency designee may “authorize the employee to participate in the matter based on a determination, made in light of all relevant circumstances, that the interest of the Government in the employee's participation outweighs the concern that a reasonable person may question the integrity of the agency's programs and operations.”
Preservation of a quorum appears to be one such circumstance. The Office of Government Ethics issued an opinion years ago noting that in “the situation where an individual's participation is essential for the presence of a quorum,” “the rule of necessity operates to authorize, or perhaps to require, participation where recusal would otherwise be mandated.” OGE 83x18, Nov. 16, 1983. That opinion evidently remains in force today. Courts also have recognized the rule of necessity, usually in the context of state administrative proceedings, but occasionally when confronting challenges to federal agency action. See, e.g., Amos Treat & Co., Inc. v. SEC, 306 F.2d 260, 266 n.12 (D.C. Cir. 1962).
The NRC has adopted a variation on the rule of necessity, as a Commissioner can elect to participate in a matter to preserve a quorum, and then abstain from a vote—an approach that would minimize the appearance of partiality while preserving the agency’s ability to perform its functions. That policy may be no help, however, if two votes are needed to authorize agency action. FERC, the CFTC, and the SEC do not appear to have invoked the rule of necessity in the past, presumably because they could always muster a quorum. But given the likelihood that Commissioner vacancies at the four agencies will not be filled until well into 2017, some or all of the agencies may decide to revisit calling on the rule of necessity. They may conclude that if a recusal by individual Commissioners would prevent action on a key regulation or enforcement proceeding, the need for action outweighs any perception of a conflict of interest by the Commissioners.