10 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...

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11 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
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat wa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last mont ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allo ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Schem ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Sk ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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