360° Coverage : Did Obama's New FERC Nominee 'Criminalize' Energy...

2 Updates

Did Obama's New FERC Nominee 'Criminalize' Energy Regulation?

May 6 2014, 6:07pm CDT | by

Later this month, the U.S. Senate will hold confirmation hearings on President Obama’s nominee, Norman Bay, for the head of the U.S. Federal Energy Regulatory Commission. The outcome of the...

Filed under: news

 
 
 

19 weeks ago

Did Obama's New FERC Nominee 'Criminalize' Energy Regulation?

May 6 2014, 6:07pm CDT | by

Later this month, the U.S. Senate will hold confirmation hearings on President Obama’s nominee, Norman Bay, for the head of the U.S. Federal Energy Regulatory Commission.

The outcome of the confirmation hearing may matter far more than most people appreciate.

Before teaching criminal law at the University of New Mexico School of Law, Bay served as a federal prosecutor for more than a decade in the District of Columbia and New Mexico. Bay is a borne and bred “federal prosecutor.” By contrast, prior to joining FERC as the head of enforcement in 2009, Bay had virtually no experience in energy regulation or markets.

Bay’s prosecutorial instincts have shaped the core policies and procedures FERC has developed to implement the expanded enforcement authority Congress granted it in EPAct 2005 to address manipulative conduct and deceptive practices in the wholesale electricity and natural gas markets.

In particular, Bay has been instrumental in shifting FERC’s institutional practices away from more traditional energy regulation and toward a kind of shock-and-awe paradigm for policing markets.

During tenure at FERC, Bay has expanded the scope of his office’s powers to “prosecute” allegedly fraudulent activity by bureaucratic fiat with few if any meaningful mechanisms for ensuring public accountability.

In 2010, FERC adopted the so-called “Policy Statement on Penalty Guidelines” to calculate civil fines and assess penalties for fraud and market manipulation. The Penalty Guidelines were modeled on the U.S. Sentencing Guidelines, which establish the formulas for calculating fines and prison sentences for criminals convicted of a federal crime.

Congress enacted the U.S. Sentencing Guidelines during the Reagan administration to provide certainty, fairness, and transparency for criminal sentences. The objective was to avoid conflicting sentences for the same offense in different jurisdictions. One judge fines a driver $5 for driving five miles over the speed limit while another judge fines a driver charged with the same offense $2 million.

After FERC adopted the Guidelines, it received considerable pushback from the industry, which argued that the Sentencing Guidelines were not intended to apply to violations of regulatory regimes of the sort enforced by FERC.

Per FERC’s summary: “Specifically, these commenters suggest that modeling the Penalty Guidelines on a criminal framework is wrong because, unlike in the civil and regulatory context, criminal cases require the government to prove, and an independent jury or judge to find, a defendant guilty beyond a reasonable doubt before imposing penalties on organizations,” said the Edison Electric Institute in comments.

Like the Sentencing Guidelines, the Penalty Guidelines implicitly grant enormous discretion to the attorneys representing FERC’s office of enforcement. This is dangerous.

“It has been a virtual mantra for observers of federal sentencing . . . that the Guidelines produced a great ‘transfer of power’ to prosecutors,” Robert Weisberg, a professor of criminal law at Stanford Law School wrote in 2005.

Supreme Court Justice Robert Jackson explained the significance of granting prosecutors’ discretion to charge individuals with crimes given the number of laws on the books.

“If the prosecutor is obliged to choose his cases, it follows he can choose his defendants,” said Jackson. This results in “[t]he most dangerous power of the prosecutor: that he will pick people he thinks he should get, rather than pick cases that need to be prosecuted.”

A series of recent decisions by the U.S. Supreme Court has begun to reign in this prosecutorial discretion.

Notably, in 2006, Bay published a law review article arguing that these recent decisions would not appreciably curtail the prosecutorial discretion in federal courts.

“Power corrupts, and absolute power corrupts absolutely,” said Lord Acton. This is a basic idea behind the U.S. Constitution. So is due process./>/>

For better or worse, FERC‘s recent flurry of aggressive enforcement actions charging financial institutions with alleged fraud is symptomatic of the regulatory overreach that inevitably results when too much discretion is combined with too little accountability.

Exhibit A: the alleged fraudsters targeted in FERC’s most aggressive actions have uniformly refused to admit any actual wrongdoing.

FERC’s growing culpability gap has not been entirely overlooked by decision makers.

In July, Senators Elizabeth Warren and Edward Markey asked FERC’s Commissioner Jon Wellinghoff why JP Morgan was “permitted to avoid an admission of guilt . . . [as] a precondition for settlement?”

Rather than explaining why FERC didn’t demand an admission of wrongdoing from JP Morgan, Wellinghoff’s response merely begged the question, stating that, “in certain circumstances, it is appropriate to insist on an admission of liability.”

FERC’s recent enforcement actions are so cloaked in non-public proceedings that only bits and pieces of the evidence and supporting legal analysis are available.

There is the one exception to this general lack of transparency. Powhatan Energy has put ALL of its response to FERC’s allegations of market manipulation a part of the public record.

If Powhatan’s experience is any indication of FERC’s anti-manipulation enforcement policies, the political risks of participating in wholesale power markets are approaching Hugo Chavez-scale proportions.

But more about than later . . .

 
Update
2

3 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 b ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

3 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of M ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Pakistanis prominent winners at UK's Asian achievers awards
London, Sep 19 (IANS/RAY) Persons of Pakistani-origin emerged as prominent winners at the 2014 Asian Achievers Awards in Britain Friday while Sir Tejinder Singh Virjee, a professor of physics at Imperial College, London, headed the list of Indian-origin recipients.
 
 
Sierra Leone launches 'stay at home' drive to fight Ebola
Freetown, Sep 19 (IANS) Sierra Leone started a three-day "stay at home" campaign to raise awareness about the Ebola virus that has killed close to 500 people in the West African country.
 
 
Kenya to have security, health centre with EU's $65 help
Nairobi, Sep 19 (IANS) The European Union Friday said it will provide 65 million dollars to build a new regional security and health center in Kenya.
 
 
Pakistan says it values China's support for SCO membership
Islamabad, Sep 20 (IANS) Pakistan Friday said it appreciates China's support for the country's quest to become member of the Shanghai Cooperation Organization (SCO) as the group has agreed to expand its membership.
 
 
 

Latest from the Network

Gemma Ward makes modelling comeback
Los Angeles, Sep 20 (IANS) Australian model-turned-actress Gemma Ward made her modelling comeback at the Milan Fashion Week after seven-year hiatus. The 26-year-old took to the catwalk for Prada's spring-summer 2015...
Read more on Celebrity Balla
 
Pakistanis prominent winners at UK's Asian achievers awards
London, Sep 19 (IANS/RAY) Persons of Pakistani-origin emerged as prominent winners at the 2014 Asian Achievers Awards in Britain Friday while Sir Tejinder Singh Virjee, a professor of physics at Imperial College,...
Read more on Celebrity Balla
 
Sierra Leone launches 'stay at home' drive to fight Ebola
Freetown, Sep 19 (IANS) Sierra Leone started a three-day "stay at home" campaign to raise awareness about the Ebola virus that has killed close to 500 people in the West African country. Declaring the campaign last...
Read more on Business Balla
 
Slovakia hails referendum's result in Scotland
Bratislava, Sep 19 (IANS) Slovakia has welcomed the result of the independence referendum in Scotland, with the Slovak Foreign and European Affairs Ministry announcing Friday it had an interest in a strong UK as a...
Read more on Politics Balla
 
Kenya to have security, health centre with EU's $65 help
Nairobi, Sep 19 (IANS) The European Union Friday said it will provide 65 million dollars to build a new regional security and health center in Kenya. The center, to be located in Nairobi, will be used to prevent and...
Read more on Politics Balla
 
'Ireland enjoys excellent ties with Britain, Scotland'
Dublin, Sep 19 (IANS) Irish Foreign Minister Charlie Flanagan Friday said his country enjoys excellent and ever-improving relations with Britain and Scotland. "The strong bonds and historic links between us all run...
Read more on Politics Balla
 
Chinese vice premier calls for regional agricultural cooperation
Beijing, Sep 19 (IANS) Chinese Vice Premier Wang Yang Friday called for greater agricultural cooperation among the Asia-Pacific Economic Cooperation (APEC) economies in the wake of food security challenge. Speaking at...
Read more on Politics Balla
 
Russian PM hails economic shift to Asia-Pacific region
Moscow, Sep 19 (IANS) Russia's shift of its economic development strategy onto the Asian-Pacific region is a "natural response" to the development of global affairs, Russian Prime Minister Dmitry Medvedev said Friday...
Read more on Politics Balla
 
Museum on human rights opens in Canada
Toronto, Sep 20 (IANS) Governor General of Canada David Johnston inaugurate the Canadian Museum for Human Rights in Winnipeg, Manitoba in central Canada Friday. The Museum can play a vital role in helping to engage in...
Read more on Politics Balla
 
Alba learnt beauty tricks from grandma
Los Angeles, Sep 20 (IANS) Actress Jessica Alba says she learnt a lot of her beauty tricks from her grandmother. The 33-year-old informs that living with her Latin grandmother, as well as her mother, as a child meant...
Read more on Celebrity Balla