The Federal Energy Regulatory Commission (FERC or the Commission) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil, among other responsibilities. FERC's jurisdiction and regulatory authority are largely focused on interstate energy transactions, the development of a reliable energy infrastructure, and the protection of wholesale customers from unjust and unreasonable rates or undue discrimination and preference. FERC normally has five commissioners, with a quorum of three members required to be present to transact business. As of February 3, 2017, following the resignation of former Chairman Norman Bay, there were only two serving FERC commissioners. This report will discuss the current lack of quorum in the context of the Commission's history, its responsibilities, and its major initiatives that may be impacted by the lack of quorum. In 1920, Congress enacted the Federal Water Power Act (FWPA) to provide federal oversight of hydropower development on navigable waters in the United States. The act created the Federal Power Commission (FPC) to regulate the construction and operation of nonfederal hydropower projects. In subsequent years, many companies began to enter the electric power industry. Large companies began to form and consolidate the industry, as economies of scale began to dominate the production of electric power. Many of these individual companies fell under the organizational control of even larger "holding companies." This was likely an effort to evade state regulation because states did not have jurisdiction over interstate transmission or rates charged for electricity, and federal regulations did not exist for such interstate activities. In 1935, Congress passed the Public Utility Act (PUA) which sought to end the abuses of market power at that time. Title I of the PUA, the Public Utility Holding Company Act of 1935 (PUHCA; P.L. 74-333), was created to address the lack of oversight over holding companies. Among other actions, PUHCA gave the Securities and Exchange Commission (SEC) authority over many holding company transactions, and it limited power industry mergers and acquisitions to contiguous areas. Title II of the PUA amended the FWPA to create the Federal Power Act (FPA), and granted authority to the FPC to regulate the interstate transmission and sales of electricity and natural gas. The FWPA became Part I of the FPA, with the FPC assuming authority over nonfederal hydropower projects on navigable waterways and federal lands. Part II of the FPA authorized the FPC to regulate the interstate transportation and wholesale sale (i.e., sale for resale) of electric energy, while leaving jurisdiction over intrastate transportation and retail sales (i.e., sale to the ultimate consumer) in the hands of the states. Under FPA Section 205, all rates and charges "made, demanded, or received" by public utilities for the transmission or sale of electricity subject to FPC authority cannot be "unjust or unreasonable" and cannot be "unduly discriminatory or preferential." Under FPA Section 206, the FPC could initiate an investigation (on its own or by request) to ensure that rules or practices affecting wholesale rates are just and reasonable. In 1977, Congress enacted the Department of Energy Organization Act (EOA, P.L. 95-91 ), terminating the FPC and creating FERC as an independent commission administratively situated within the newly formed U.S. Department of Energy. The reorganization effort was largely ascribed to growing doubts about the effectiveness of the FPC. The organization of FERC is addressed in EOA Section 401(b): The Commission shall be composed of five members appointed by the President, by and with the advice and consent of the Senate. One of the members shall be designated by the President as Chairman. Members shall hold office for a term of four years and may be removed by the President for inefficiency, neglect of duty, or malfeasance in office. Section 402 of the EOA outlined FERC's jurisdiction, transferring some of the FPC's obligations to FERC. The Commission was tasked with hydroelectric dam licensing and safety (primarily under Part I of the FPA), and regulation of rates and services for the transmission or wholesale sale of electric energy (primarily under Parts II and III of the FPA). Section 402 of the EOA also transferred the FPC's administrative, procedural, and accounting functions (among other responsibilities) under Part III of the FPA to FERC. Among other responsibilities, the EOA also transferred authority under the Natural Gas Act (NGA; P.L. 75-688) to FERC for the establishment, review, and enforcement of rates and charges for the transportation and sale of natural gas (under NGA Sections 1, 4, 5, and 6), and for the issuance of a certificate of public convenience and necessity, including abandonment of facilities or services, and the establishment of physical connections under Section 7 of the NGA. Under its current statutory authority, FERC regulates the transmission and wholesale sales of electricity in interstate commerce; reviews certain mergers and acquisitions and corporate transactions by electricity companies; regulates the transmission and sale of natural gas for resale in interstate commerce; regulates the transportation of oil by pipeline in interstate commerce; approves the siting, construction, operation, and abandonment of interstate natural gas pipelines, LNG terminals, and natural gas storage facilities; reviews the siting application for electric transmission projects under limited circumstances; ensures the safe operation and reliability of proposed and operating LNG terminals; licenses and inspects private, municipal, and state hydroelectric projects; protects the reliability of the high voltage interstate transmission system through mandatory reliability standards; monitors and investigates energy markets; enforces FERC regulatory requirements through imposition of civil penalties and other means; oversees environmental matters related to natural gas and hydroelectricity projects and other matters; and administers accounting and financial reporting regulations and conduct of regulated companies. FERC's jurisdiction and regulatory authority are largely focused on interstate energy transactions, the development of a reliable energy infrastructure, and the protection of wholesale customers from unjust and unreasonable rates or undue discrimination and preference. In order to manage its obligations and functions, FERC has been structurally organized to address these areas of responsibility. Figure 1 illustrates FERC's hierarchy and organization into 12 separate offices. Each office is responsible for a specific portion of the Commission's mission and regulatory obligations. FERC normally has five commissioners, with one member serving as chairman. On January 25, 2017, President Trump designated Commissioner Cheryl LaFleur to serve as acting chairwoman of FERC, replacing Norman Bay as chair. Commissioner Bay subsequently resigned from the Commission effective February 3, 2017, leaving FERC without a voting quorum of three members; only acting Chairwoman LaFleur and Commissioner Colette Honorable remain as members of the Commission. A quorum of three members is required to be present to transact business. Under EOA Section 401(e), "... a quorum for the transaction of business shall consist of at least three members present. Each member of the Commission, including the Chairman, shall have one vote. Actions of the Commission shall be decided by a majority vote of the members present." The Commission generally has three members from the party of the incumbent President, and two from the minority party. However, Republican Commissioner Philip Moeller left FERC in October 2015, and fellow Republican Tony Clark left the Commission following the expiration of his term on June 30, 2016. President Obama did not nominate replacements for either Commissioners Moeller or Clark, meaning that FERC was operating with only three Democratic commissioners since September 2016. Commissioner Honorable's current term expires on June 30, 2017, and Commissioner LaFleur's term expires on June 30, 2019. A quorum will not be restored until at least one new member is seated. The absence of a quorum limits FERC's authority to issue orders concerning projects or rate and tariff issues as discussed below. On February 3, 2017, anticipating that the lack of quorum would continue for an indefinite period, the Commission chose to issue an order (while it still had a quorum) delegating authority to staff for certain agency functions. FERC stated that the order was issued to assure that the Commission's regulatory obligations would be carried out "in an effective and efficient manner consistent with the public interest." This is not the first time the Commission has issued a delegation order following a loss of quorum. FERC took similar action to delegate authority to its staff to act in the absence of a quorum in 1993. FERC recognizes in the current delegation order that, in the absence of FERC authority, certain rate filings (for example, under the FPA and NGA) may take effect under operation of law "without suspension, refund protection, or the ability of contesting parties to appeal." Thus, FERC states that the delegation order is intended to "ensure that staff has the authority to prevent such filings from going into effect by operation of law during the period in which the Commission lacks a quorum." FERC summarized the delegation of agency authority as follows: Rate and other filings: The Director of the Office of Energy Market Regulation (OEMR) can accept and suspend rate filings, and make them effective subject to refund and further order of the Commission, or accept and suspend them, make them effective subject to refund, and set them for hearing and settlement judge procedures. For initial rates or rate decreases submitted under Section 205 of the FPA, for which suspension and refund protection are unavailable, FERC staff is granted authority under Section 206 to institute proceedings in order to protect the interests of customers. Extensions of time: FERC staff can extend the time for action on matters where it is permitted by statute. Waiver requests: The Director of OEMR can take appropriate action on uncontested filings under the NGA, FPA, and ICA, seeking waivers of the terms and conditions of tariffs, rate schedules and service agreements, including waivers related to capacity release and capacity market rules.