Bearing Down - Court of Contempt: FERC and the Demise of Judicial Decorum (Courtesy of "Clearing Up," Ben Tansey)

In case the Northwest needed any more evidence of Federal Energy Regulatory Commission’s profound contempt, Judge Edward M. Silverstein, one of the agency’s longest-serving administrative law judges, has issued the mandate.

After more than a decade trying to squeeze a modicum of justice from FERC, Seattle and Tacoma, the last Northwest utilities with the courage to push aging claims over outrageous prices charged during the Power Crisis of 2000-2001 have at last been granted a hearing before a presiding FERC judge, along with their fair-weather compatriots, the California Parties (EL01-10-086).

Nearly 50 attorneys turned up for a two-hour, pre-hearing conference July 11 in FERC Hearing Room 1 where, according to a transcript posted in the docket, Silverstein systematically treated the Commission, the Chief Judge, the attorneys, his colleagues, his own law clerk and every Western ratepayer to a patronizing spectacle of open indifference.

“Settle this case,” he demanded almost from beginning, actively abandoning any pretense of objectivity. “It’s gone on for 11 years already. It’s dumb not to settle this case. It’s bad lawyering not to settle this case. The only people who benefit from this case are the lawyers. I guarantee it.”

Gosh, I bet it never occurred to any of the parties to settle. What a genius, this  Silverstein. I wonder if he knows the parties have already filed nearly a dozen bilateral settlements. And I guess it’s completely irrelevant that during May and June his colleague, FERC settlement judge John Dring, filed no fewer than eight separate reports with the boss, FERC Chief Judge Curtis Wagner, each stating that remaining bilateral negotiations among the parties had “reached an impasse.” He recommended termination of settlement proceedings and appointment of a presiding judge. Wagner approved the request, noting that the proceeding had been in settlement phase for five months and that “it is now time to move forward with the hearing.”

Silverstein went so far as to recommend a mediator. The parties could call the FERC Dispute Resolution Office’s Helpline (which resolves only half the cases it takes), or they could hire Bruce Birchman, a former FERC ALJ. “He’d be happy to charge you big bucks to mediate,” Silverstein said before making a crack about Birchman’s memory and adding, “He’s not as young as he used to be.”

But Silverstein was just revving up. He literally told the parties there was no chance the commission would ever seriously weigh their arguments or evidence. With the breathtaking honesty of a man possessed of unrestrained impropriety and ease with the exercise of administrative fiat, he revealed, “The Commission doesn’t care what you say.  They’re going to do whatever they want to do, and the people who write their decisions don’t understand the cases, so it doesn’t really matter.”

One must pause to fully absorb the vast scope of the cynicism of this statement. It is worthy of the basest outtakes from the Enron trader tapes: “Burn, baby, burn.”

Silverstein had a much more worldly and colorful theory about who parties should address themselves to if they want to win: the circuit law clerk.

At some length, he explained that clerks graduate in May, take the bar exam in July and then spend a month sitting on the beach drinking until the Friday before Labor Day. They “spend the weekend sobering up” and take Tuesday off before reporting to court. There, the circuit judge hands them this unbelievably complicated case with its 1,500 exhibits and 15,000-page transcript, and demands a written summary so the judge can be ready for next week’s oral argument. “See, that’s the kid that you have to worry about.”

Silverstein is probably dead right about both the commission and the clerk. But such brutal truth-telling, while at once chilling and refreshing, is plainly inappropriate coming from the bench.

Silverstein spent an equal amount of time discussing the rules of the tie contests that are apparently common to his proceedings (“scarves don’t count but bow ties win”), and assuring the “girls” that they, too, can participate. But he prejudged even this contest, telling Gary Bachman, attorney for Avista and Puget Sound Energy, that his “islands and toucans” tie had already won.

Then, no doubt attempting to preserve the appearance of fairness, he advised Paul Fox, attorney for Powerex, that Silverstein’s law clerk, Kaleb Lockwood, was absent that day because he was interviewing for a job at Fox’s lawfirm, and that Fox should “tell the hiring partner” to employ the young man.

Perhaps Silverstein was just trying to break the ice. Hey, I’ve been to a few FERC hearings, I get it. Levity, even irreverence, are welcome relief. And goodness knows, FERC administrative hearings aren’t courtroom trials, nor its judges legal scholars. In fact most are ex-Social Security or Medicare ALJs with no background in energy.

But informality must be balanced with respect for the parties and the proceedings, for the seriousness of the case at bar and, perhaps, even the issues and principles involved. Somewhere out there are clients who believe their interests are at stake, who are paying attorneys to laugh at Silverstein’s jokes, and who might even have the naïve audacity to think they deserve a fair hearing. This is especially so in the Western Refund proceedings, where claimants have hung in like champions against an onslaught of masterful counterparty lawyering and pernicious FERC obstruction.

But Silverstein doesn’t care. How do I know? He said so, not once, but twice. He said “It doesn’t matter” three times—and all during the single hour he did not devote to engaging in game show-host like banter with the attorneys during introductions.

He doesn’t care that unjust and unreasonable prices forced Tacoma to put through a 50 percent retail rate increase months before Bonneville, its principal supplier, did the same on the wholesale level, or that one of the city’s largest customers went bankrupt due to high rates, leaving it with a $2.2 million bad debt. He didn’t have to watch Tacoma’s other industrials suspend or curtail operations and jobs, or pay for installation of 48 MW of diesel generation. And he needn’t reflect on how Tacoma survived only by plowing through a $130 million reserve and borrowing $35 million more. But he sure got off a couple great one-liners.

Silverstein said he was “shocked and amazed” that the first item on the parties’ proposed schedule was a statement of claims. By now in the case, “Doesn’t everybody know everything about everybody else, including whether you wear briefs?” The silver lining was that it gave him another opportunity to berate the attorneys. “I’m just stunned at the lack of ability of the counsel in this room to discover exactly what the claims [are].”

Nor did his parade of contempt cease before those who are professionally obliged to retain his goodwill. Silverstein advised that he even holds Chief Judge Wagner in the palm of his hand. File any motion you wish, but “He’s going to do what I want.”

Toss in the irony that Silverstein was Wagner’s punishment for the California Parties successfully arguing that his original designee for the hearing, Carmen Cintron, was disqualified because she’d sat in on earlier settlement negotiations. They said her appointment violated FERC policy that “parties in individual proceedings appear to and actually receive a fair and impartial adjudication of their claims.” Take that, California.

Silverstein is only the latest in a long line of FERC judges hired to lead Western refund claimants into the middle of FERC’s procedural desert. The agency has repeatedly sent every signal it can that it will never voluntarily use its authority to make Seattle, Tacoma or California whole. Silverstein is only its most recent, if crudest, offering.