Sixth Circuit Limits Executive Authority Possessed by Commission Chairs

In many independent commissions, the chairperson possesses some degree of executive authority that allows them to set the agency’s agenda and direct its day-to-day operations. In establishing the Federal Energy Regulatory Commission (FERC), Congress granted the responsibility for “the executive and administrative operation of the Commission” to the chairperson. 42 U.S.C. § 7171(c). In Electric Power Supply Ass’n v. FERC, 89 F. 4th 564 (6th Cir. 2023), the Sixth Circuit concluded that this authority does not extend to a unilateral request to a federal court for remand of a ratemaking order.

In 2020, FERC issued a ratemaking order that increased the price cap for reserve electricity. Commissioner Richard Glick dissented from the order, and several entities challenged the order in the D.C. Circuit. Following his inauguration, President Biden designated Commissioner Glick as FERC’s chairperson and appointed two additional commissioners to FERC. Without notifying the other commissioners or holding a vote, now-Chairman Glick ordered FERC’s attorneys to request that the D.C. Circuit remand the order. The D.C. Circuit remanded, and the Commission voted to reinstate the previous price cap for reserve electricity. Petitioners challenged FERC’s decision to reverse its order in the Sixth Circuit, arguing that the chairperson lacks authority to unilaterally request a remand of a FERC order.

The Sixth Circuit held that the chairperson’s authority does not include the ability to unilaterally request a remand of a prior order. Beginning with the statutory text, the majority noted that any “transaction of business” requires a quorum of three commissioners and a majority vote. The “transaction of business” includes efforts to “modify or set aside” an order. 42 U.S.C. § 7171. Although the statute grants the chairperson some unilateral authority, the majority interpreted the statute as limiting the chairperson’s authority to personnel and ministerial tasks. Specifically, the statute envisions that the chairperson will hire personnel and hearing examiners, supervise personnel, distribute business to personnel, and hire consultants and experts. See 42 U.S.C. § 7171(c). “None of these personnel matters or ministerial tasks describes or for that matter even hints at a unilateral authority to undo a Commission order by moving a court to remand the order to the agency.” Electric Power Supply Ass’n, 89 F.4th at 554.

The majority then described the limited powers of the chairperson as consistent with the objectives of independent commissions. Independent commissions are grounded in ideas of deliberative process. Quorum rules and the requirement of a majority vote ensure that “actions of a collective body represent its whole.” Id. Although the statute grants the chairperson responsibility for “the executive and administrative operation of the Commission,” the chairperson acts “on behalf of the Commission.” 42 U.S.C. § 7171(c). According to the majority, this language limits the chairperson’s authority “to policies that the agency has already asked the Chairman to undertake.” Electric Power Supply Ass’n, 89 F.4th at 556. The chairperson could not request remand of the order on behalf of FERC absent approval by a majority of commissioners.

The Sixth Circuit panel majority also acknowledged that increasing the chairperson’s power poses a threat to FERC’s independence. By default, the Department of Justice represents the federal government—and its agencies—in federal court. Through the Department of Justice, the president exercises some degree of control over agency litigation. Unlike most agencies, FERC’s chairperson designates attorneys to represent the agency in litigation. 42 U.S.C. § 7171(i). According to the majority, FERC’s litigation independence “would vanish if the Chairman, who the President designates among the Commissioners, also could control the Commission’s litigation decisions by himself.” Electric Power Supply Ass’n, 89 F.4th at 554. The court’s decision echoes Todd Phillips’ conclusion that presidents exercise great control over independent commissions through the selection of the chairperson. See generally Todd Phillips, Commission Chairs, 40 Yale J. on Reg. 277 (2023). Presidents select chairpersons whose preferences align with their policy goals and, consequently, the chairperson uses their executive authority to advance the President’s policy goals.

Although the panel agreed that the chairperson exceeded their statutory authority, it divided on the remedy. The majority remanded the order to FERC to “decide in the first instance, what if anything, it could or would have done differently in response to this legal mistake.” Electric Power Supply Ass’n, 89 F.4th at 557. In doing so, the majority recognized that FERC has authority to modify or set aside the order as soon as the D.C. Circuit remanded. Judge Clay dissented in part. Rather than remand the order, Judge Clay would have vacated the order because the court had no way of knowing whether the agency would have reached the same conclusion without the procedural error. Despite disagreeing over the remedy, the Sixth Circuit sent a clear signal that FERC’s chairperson does not exercise unlimited authority.