The inauguration of the Biden administration will bring a plethora of policy changes focused on US electric power production, fuel, and climate change mitigation and remediation. The Biden administration’s Climate Executive Order1 declares the intention to “reduce greenhouse gas emissions” and “bolster resilience to the impacts of climate change.”2
The US Federal Energy Regulatory Commission (FERC or Commission) regulates interstate power markets, corporate transaction, transmission and rates, and FERC is expected to play a critical role in the Biden administration’s emissions-reduction and climate resilience agenda. But the Climate Executive Order is not binding on FERC; the US Supreme Court has held that FERC has plenary and exclusive jurisdiction over most of the electric-sector power sales and market structure issues that the Climate Executive Order implicates. While most of the Climate Executive Order’s directives are addressed to environmental and resource agencies, several will require FERC action to fully implement, including:
- Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process (85 Fed. Reg. 84130), to be reviewed for suspension, revision or rescission as soon as possible; and
- National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review (85 Fed. Reg. 31286), to be reviewed for suspension, revision or rescission by August 2021.
- Although theses rulemakings were released by the Environmental Protection Agency (EPA), the recovery of air pollution control costs, and of losses experienced by most generating companies, are regulated by FERC.
The Climate Executive Order also establishes an “Interagency Working Group on the Social Cost of Greenhouse Gases” (Working Group), chaired by the chair of the Council of Economic Advisers, the director of the Office of Management and Budget and the director of the Office of Science and Technology Policy, and including representatives of 11 other cabinet departments and White House offices. The Working Group is to assemble estimates of: (a) the social cost of carbon, (b) the social cost of nitrous oxide and (c) the social cost of methane within 60 days, present preliminary recommendations to the White House by September 2021 and issue a final report that establishes actual unit-dollar values by January 2022. FERC is not represented on the Working Group, but has exclusive jurisdiction over the inclusion or exclusion of externality pricing in nearly all US wholesale power markets. The Working Group’s determinations are not likely to be binding on FERC.
The White House did make one key FERC announcement: Richard Glick, the senior Democratic FERC incumbent, replaces Republican James Danly, who was demoted from chairman to commissioner. FERC’s five commissioners serve staggered five-year terms, and the president may designate any of the five as chairman at any time. FERC has had six chairs (including acting chairs) during the last four years.
Unlike other independent federal agencies, the entire FERC staff reports to the chairman and not to the full Commission, and the chair also controls the Commission’s voting agenda. But Chairman Glick will not soon control the voting results of the Commission: FERC is now composed of three Republican and two Democratic commissioners, and no Commission vacancy is expected to occur until Republican Neil Chatterjee’s term expires on June 30, 2021, and possibly not even then if Chatterjee holds over until the end of the congressional session, as legislation permits. This means that Chairman Glick might not schedule for Commission votes on new rulemaking and policy initiatives that might be favored by the White House but might not survive a 3-2 Commission vote. This is not an unfamiliar situation at FERC; during the 1993 Clinton transition, for example, it took over four months before that new administration’s FERC nominees took office, and it took nearly a year for the new Obama administration to install one FERC commissioner following the 2009 inauguration.
In the meantime, senior FERC staff remains in place, and federal personnel regulations prevent new Chairman Glick from reorganizing the Commission or its senior staff during the first 120 days of the new administration.
1 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, January 20, 2021, posted at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/ (“Climate Executive Order”).
2 See Mayer Brown’s Legal Update on the Climate Executive Order, at https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2021/01/biden-executive-order-on-energy-regulation_v2.pdf.