Former commissioner: Bay's call for FERC reform is 'musings' of outgoing chair

Former FERC Chairman Norman Bay's suggestion that the commission reassess the way it reviews natural gas pipelines and LNG export projects, made as he left the agency on Feb. 3, is more of a theoretical exercise than a practical push for change, said a former commissioner.

Many FERC commissioners and politicians have regrets after leaving office, said Marc Spitzer, who served as a Republican member of the commission from 2006 through 2011 and who in the 1990s served four terms in the Arizona Senate. They think of improvements they might have made, Spitzer said.

For Bay, whom Spitzer praised as a smart attorney and former law professor, this seems to have occurred just before he departed FERC. In a statement attached to a FERC order issued on the day he left, Bay noted that applications to build gas infrastructure have attracted an increasing amount of opposition. In light of this, he recommended that FERC reconsider how it evaluates whether a gas project is needed and that FERC consider a broad review of the environmental consequences of increased gas production in the Marcellus and Utica shales and other gas production regions.

The ideas appeared to be a change from positions Bay defended as a chairman. Bay had argued against the idea that FERC, except in select cases, had to conduct such broad reviews, also called "programmatic reviews," but Bay has also encouraged environmental groups, landowners and other stakeholders to use the commission's comment procedures to express concerns. Bay's written statement came at the end of a Feb. 3 order approving National Fuel Gas Co.'s Northern Access 2016 project.

Spitzer said in an interview that the statement, which was not part of a dissent and did not keep Bay from approving the Northern Access 2016 project, probably falls under the category of "musings" rather than an actionable memo. "He is just a citizen like anyone else," Spitzer said.

"I don't think the Sierra Club can say Mr. Bay's separate statement is legal authority for the proposition that FERC erred by not having a programmatic review," he said, as the group and others have tried to do in a challenge to Williams Cos. Inc.'s Atlantic Sunrise project, approved the same week as Northern Access.

If he were discussing the idea of programmatic reviews with Bay, Spitzer said, he would bring up the counterargument that they tend to produce the result that no energy infrastructure gets built: "no refineries, no pipelines." Every region would argue that energy infrastructure needed by society should be located somewhere else, he said, similar to arguments over where to dispose of nuclear waste under the Carter administration.

"That would be my rebuttal to Norman," Spitzer said. "In theory, it makes sense, but in the real world it's just not practical."

For the groups that want fossil fuels to stay in the ground, the stalemate over gas infrastructure created by programmatic reviews would be a good outcome, Spitzer said. The conservative end of the political spectrum has to be careful of paralysis too, Spitzer said, where certain industries or organizations might say they cannot make a significant difference in curbing global warming and decide to do nothing at all. Gas infrastructure has its place, Spitzer said.

"A lot of gas is being used to displace coal generation in the U.S. and elsewhere," Spitzer said. "If Japan has issues with nuclear power because of the Fukushima problem, it's either gas or coal. So if we export LNG to Japan, we are helping to reduce greenhouse gas emissions. So whether the gas is used in the U.S. or abroad, it is environmentally beneficial."

Spitzer, now a partner with Steptoe & Johnson LLP, said he could relate to Bay. Spitzer said he felt he had left some business undone when he left the Arizona Corporation Commission, to which he was elected chairman in 2002.

"Probably the biggest thing was the whole solar-deployment, distributed-generation issue," he said. The business model for some solar companies at that time was to sell expensive units to rich people and take advantage of subsidies, he said.

"I think the government should have just taken the bull by the horns and done a welfare program and just built solar units for poor people's homes," Spitzer said, observing that his ideas might not suit everyone in the Republican party. "A lot of them are very energy inefficient. I did Habitat for Humanity, house painting in South Phoenix, and they were in terrible condition. I think if we did a needs-based program, we could have done a lot for the environment and a lot for poor people at the same time."