The Federal Energy Regulatory Commission regulates interstate pipelines, electricity transmission and hydroelectric power. The question yesterday was how well it regulates itself.
An intervenor in one of the FERC's biggest, most controversial pending cases -- a consortium's application to build a 370-mile, $583 million natural gas pipeline from the Canadian border to Long Island -- has accused senior staff members of improper contact with representatives of the applicants.
The complaint was supported by copies of FERC building sign-in sheets that appear to show that executives and lawyers of the pipeline companies and gas distributors that want to build the Iroquois Pipeline line met with staff members handling the case without notifying representatives of the opposition. In legal terms, such a meeting is called an ex parte communication. Most tribunals, including FERC, prohibit ex parte communication.
The agency responsible for investigating this complaint is none other than the Federal Energy Regulatory Commission.
A system in which a regulatory agency is responsible for policing itself caused a decade of grief, litigation and scandal at the U.S. Nuclear Regulatory Commission, finally prompting Congress to install an independent inspector general at the NRC.
There is no such independent authority at FERC, an inbred world of specialized lawyers and technical analysts who talk to each other in terms few outsiders can fathom. Natural Gas Intelligence, a trade journal that covers FERC regularly, said meetings between regulators and regulated that could cover prohibited topics are "all too common at the agency. The problem has apparently surfaced with Iroquois because of the large and controversial nature of the project."
But FERC Chairman Martin L. Allday said yesterday that he is satisfied that FERC members and staff aides investigating a complaint about their colleagues would do a fair and thorough job.
"I treat that allegation very seriously," said Allday, a folksy West Texas energy lawyer who took office in November. "I told the staff, things are going to be done straight."
He rejected the idea that FERC procedures set up the same people to be suspect, prosecutor and judge. "I, I will investigate," he said. "I wasn't involved" in the allegedly improper meeting. "People who have known me all my life know I don't speak on an issue of this importance but what the truth is spoken."
In a meeting with reporters, Allday declined to discuss the details of the case. "I'm not trying to stonewall," he said. "We'll have something to say when the investigation is complete. I know where I'm coming from. The investigation is going to be done right."
The Iroquois application was filed four years ago, and Allday said he did not want the internal investigation to delay it. FERC has been criticized by members of Congress for the length of time it takes to process its cases.
The Iroquois project is opposed by environmentalists in New York and Connecticut and by U.S. natural gas producers who fear Canadian domination of the growing Northeast market. Allday declined to speculate on the outcome of the case, but he may have given an indication of which way he will vote.
"I don't know any way to deliver gas without putting in a pipeline or to deliver electricity without putting up a wire," he said. He said he was "sympathetic" to people who don't want the line to cross their land but "It's got to go somewhere. . . . I want pipe in the ground, I want energy delivered. I want the country warm."