When it comes to enforcing its rules, a federal agency is called upon to wear several hats. In determining whether a rules violation has occurred, the agency must investigate and bring enforcement proceedings against an alleged wrongdoer (perform a prosecutorial role). If the subject of the investigation contests the violation, then the agency must determine the facts (act as jury) and ultimately decide the matter and order appropriate remedies if necessary (act as judge). How does the same agency perform all three roles and ensure that targets of an investigation are given a fair hearing before penalties or other remedies are assessed?
These issues came up at the AGA Federal Energy Regulatory Commission (FERC) Manual Users Forum held March 31, in AGA’s offices in Washington, DC. The Forum was held to roll out the AGA FERC Manual: A Guide for Local Distribution Companies, a comprehensive guide to the FERC’s regulation of the natural gas industry with a particular focus on the needs and perspectives of gas distribution utilities. The Manual was written by lawyers at Dewey & LeBoeuf LLP and is available for sale to the general public via AGA’s Web site.
Answering the question above usually entails trying to separate as much as possible the prosecutorial role from the adjudicatory (judge and jury) role. The idea is that in order to ensure fairness, or at least the appearance of fairness, the same person should not both prosecute and ultimately decide an issue. In FERC’s case, a separation of function rule applies once a case has gone to hearing before an administrative law judge that prevents the enforcement staff involved in a particular investigation from advising the Commissioners. The intent is to put enforcement staff on equal footing with the subject of the investigation both before the administrative law judge who must determine the facts and the Commissioners who must ultimately decide the issues and impose any remedies. Some would argue that the separation should occur even earlier and apply during the preliminary stages of the investigation.
Former FERC Commissioner, Suedeen Kelly (the keynote speaker for the Forum), however, suggested that a separation of functions ends up vesting the prosecutor with greater power because the Commissioners may be less able to provide a supervisory role over enforcement staff as to whether an investigation should be brought in the first place or otherwise guide the conduct of the investigation. She makes a good point. I firmly believe decision-makers at FERC at all levels must be held accountable for their actions. But, how do Commissioners hold enforcement staff accountable while at the same time remaining impartial to decide enforcement matters? This is an issue that admits of no easy answers and one that I think FERC and the industry will struggle with for some time.