A Supreme Court ruling expanding presidential control over independent agencies has raised new questions about whether federal energy regulators can remain insulated from political pressure.
The high court’s 6-3, ideologically divided decision in Trump v. Slaughter didn’t change how the Federal Energy Regulatory Commission operates overnight. But by allowing a president power to fire commissioners at will, the ruling handed the current and future administrations greater influence over an agency that oversees billions of dollars in energy infrastructure and sets the rules for electricity and natural gas markets.
Critics fear that political meddling could ultimately end up costing ratepayers and hurting one of FERC’s key roles — maintaining a reliable electric grid.
While the Supreme Court’s ruling centered on the firing of a member of the Federal Trade Commission, the Supreme Court’s liberal minority said in their dissent that the decision shifted “tremendous power over broad swaths of American life into the President’s hands” at dozens of similarly structured agencies.
The liberal justices cited FERC as one agency that has long operated with the understanding that its decisions would not be influenced by political favoritism or partisan advantage.
“America’s economy works in large part due to the ‘stability’ and predictability fostered by such expectations,” wrote Justice Sonia Sotomayor, who led the dissent. “Today, by demanding unmediated, unmitigated Presidential control of agency decisionmaking, the majority upends all of that.”
In the wake of the Supreme Court’s decision, President Donald Trump grasped his newfound authority to boot out members of a bipartisan election commission before the midterms.
It remains to be seen how Trump or a future chief executive might exercise that power at FERC, said Ari Peskoe, director of the Electricity Law Initiative at Harvard University, in an email.
“Our President is a loose cannon,” said Peskoe. “There is no justification for firing any FERC Commissioner today, but this President acts irrationally.”
FERC Chair Laura Swett, a Republican, said during a recent FERC meeting that the Supreme Court’s decision did not alter the commission’s mission and duties. “We are and remain firmly rooted in delivering the transparency, regulatory certainty that the energy markets and consumers depend on,” she said. “That doesn’t change.”
Commissioner David LaCerte, a Republican, applauded the Supreme Court for overturning what he called unlawful precedent that for nearly a century had limited presidents to removing heads of boards or commissions only for poor work performance.
“If a commissioner is going to buckle under that pressure and compromise their integrity because they are afraid of being fired, well, they probably didn’t deserve to be in this job in the first place,” he said during the FERC meeting.
On the sidelines of the meeting, Commissioner David Rosner, a Democrat, didn’t say whether he was concerned about being removed from his post following the Supreme Court’s ruling. “For me, I’m here to do the job and follow the statute,” he told POLITICO. “That’s what I’m focused on.”
Former FERC Chair Mark Christie, a Republican, said he agreed with the high court’s decision, but he had questions about what it would mean in practice.
“If FERC is now completely under the supervision of the president, is the executive branch going to say how to decide a rate case?” said Christie. “That to me is the single biggest question.”
Rate cases are legal-style proceedings in which federal regulators decide how much a utility or pipeline company is allowed to charge its customers. Unlike rulemakings — where input from the executive branch and the public is a normal part of the process — rate decisions are supposed to be based only on evidence and arguments presented during the case. To keep the process fair, FERC has strict rules that prohibit ex parte communications, or involvement from anyone who isn’t officially a party to the case.
Those rules exist to protect decisionmaking that could unfairly lead to higher energy prices for U.S. households.
The Supreme Court may have opened the door to undercutting that firewall, Christie said.
“The biggest danger is lobbyists start lobbying the administration to get the result they want instead of playing by the rules,” Christie said.
Peskoe also questioned whether Trump or a future president might try to circumvent limits on outside communications with FERC in rate cases.
“Post-Slaughter, I could imagine a President arguing that those restrictions on him are unconstitutional. I’m not predicting what a court might rule, only that a President might make that argument,” he said in an email.
During the recent FERC meeting, Swett roundly dismissed those concerns.
“Slaughter does not affect FERC’s longstanding ex parte restrictions, which are grounded in the due process requirements under the Administrative Procedure Act,” Swett said. “And as far as who may call me at what time, about what matter, I’m not going to engage in any hypotheticals.”
Other experts warned about additional potential negative effects of the ruling on FERC.
“The Slaughter opinion is going to generate chaos,” said Jennifer Danis, federal energy policy director at the Institute for Policy Integrity at New York University.
In the ruling, the Supreme Court’s conservative majority found that commissioners at agencies exerting executive powers are subject to removal at will by the president — but did not clearly define what it means for an agency to be predominantly exercising executive authority, she said.
“It sidesteps the issues that an economic regulator like FERC is well-poised to grapple with, which is creating rules that survive multiple administrations in a legally durable way,” she said.
If the president did try to remove FERC commissioners, it could seriously hobble key decisionmaking, said Stephen Snyder, a partner at the firm Womble Bond Dickinson, who represents clients regulated by the commission.
“FERC has a lot of authority that is directly tied to having a full commission, or at least a quorum on the commission to take action, and there are some things that just cannot be done by staff of delegated authority,” he said.
Without a quorum — generally three of its five commissioners — FERC cannot issue orders on electric utility mergers and acquisitions, new policies or rulemakings or natural gas pipeline certificates.
The Supreme Court’s ruling could also allow the president to become more involved in the selection of minority party FERC commissioners, which could potentially gum up the nomination process, said Mark Chenoweth, president and chief legal officer at the New Civil Liberties Alliance. The public interest law firm backed Trump in the case.
Now the president is authorized to remove a FERC commissioner in the same way he could dismiss the secretary of the Department of Energy.
“That just means that there’s greater accountability and allows the president to take care that the law is faithfully executed. It solves any sort of insubordinate subordinates kind of problem,” he said.
Checks on the president’s new power
Even in the face of new risk of political interference, the nature of FERC’s highly technical work could shield the agency from White House scrutiny.
In the Trump era in particular, FERC plays a critical role in advancing many of the administration’s key priorities, such as approving fossil fuel infrastructure and shaping grid connections for energy-hungry data centers.
The agency also has a crucial role in maintaining the nation’s electricity supply.
FERC is “a fairly hot stove to touch if you are really meddling, and it ends up doing things like creating reliability issues,” said Snyder of Womble Bond Dickinson.
For better or for worse, FERC has operated in much the same way, regardless of which party is in power in the White House, said Danis of NYU. It’s not in Trump’s interest to fiddle with FERC’s leadership to the point that the commission wouldn’t be working for him, she said.
“It would be disruptive to hugely capital intensive energy markets and all the other things that this country is, under any administration, looking to be a leader on,” she said.
And if a president gets too power-hungry over FERC, lawmakers can always decline to confirm the White House’s nominees to replace fired commissioners.
“If the president is doing something that Congress doesn’t like — particularly if the House or the Senate is in the other party’s control — I don’t think you’ll see a lot of firing taking place,” said Chenoweth of the New Civil Liberties Alliance.
Carlos Anchondo contributed to this report.
