F.E.R.C. v. Silkman
| Decision Date | 04 January 2019 |
| Docket Number | 1:16-cv-00205-JAW |
| Citation | 359 F.Supp.3d 66 |
| Parties | FEDERAL ENERGY REGULATORY COMMISSION, Petitioner, v. Richard SILKMAN, et al., Respondents. |
| Court | U.S. District Court — District of Maine |
Andrew K. Lizotte, U.S. Attorney's Office, Portland, ME, Demetra E. Anas, Elizabeth K. Canizares, Michael Raibman, Nicholas G. Stavlas, Jeffrey L. Phillips, US Federal Energy Regulatory Commission, Washington, DC, for Petitioner.
Peter J. Brann, Stacy O. Stitham, Brann & Isaacson, Lewiston, ME, for Respondents.
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
An energy consulting company and its employee and managing member challenge FERC's assessment of civil penalties against them for violating FERC's anti-manipulation rule, alleging that the action brought in this Court by FERC is time-barred under the general statute of limitations, 28 U.S.C. § 2462. FERC maintains in a countervailing motion for summary judgment that its civil action was timely filed.
First, the Court concludes that the Respondents did not waive their statute of limitations argument. Next, the Court concludes that FERC's disgorgement order is not subject to a separate accrual date for purposes of the statute of limitations. Finally, the Court rejects the Respondents' argument that Gabelli v. SEC , 568 U.S. 442, 133 S.Ct. 1216, 185 L.Ed.2d 297 (2013) and Kokesh v. SEC , ––– U.S. ––––, 137 S.Ct. 1635, 198 L.Ed.2d 86 (2017) eclipsed United States v. Meyer , 808 F.2d 912 (1st Cir. 1987). Based on Meyer , which the Court views as binding, the Court concludes that the FERC enforcement action is not time-barred.
On December 2, 2013, the Federal Energy Regulatory Commission (FERC, the Commission) filed a petition in the District of Massachusetts for an order affirming its assessment orders. Pet. for Order Affirming FERC's Aug. 29, 2013 Orders Assessing Civil Penalties Against Richard Silkman and Competitive Energy Services, LLC (ECF No. 1) (FERC Pet. ). On December 19, 2013, the Respondents filed a motion to dismiss, Resp'ts' Mot. to Dismiss (ECF No. 8), and a motion to transfer to the District of Maine. Resp'ts' Mot. to Transfer (ECF No. 9). On January 9, 2014, FERC filed oppositions to the motion to dismiss, FERC's Opp'n to Resp'ts' Mot. to Dismiss (ECF No. 18), and the motion to transfer. FERC's Opp'n to Resp'ts' Mot. to Transfer (ECF No. 19). On July 18, 2014, Judge Woodlock heard arguments on the motion to dismiss and supplemental briefs on procedure, as well as additional arguments regarding transfer to the District of Maine. Elec. Clerk's Notes (ECF No. 43); Tr. of Mot. Hr'g (ECF No. 44).
The case was effectively stayed pending resolution of related issues in the United States Supreme Court1 and the United States Bankruptcy Court for the District of Maine.2 By April 5, 2016, both matters were resolved, and the proceedings continued. On April 11, 2016, Judge Woodlock denied the Respondents' motion to dismiss, FERC v. Silkman , No. 13-13054-DPW, 2016 WL 1444604, 2016 U.S. Dist. LEXIS 48409 (D. Mass. April 11, 2016) (ECF No. 65) ( Order on Mot. to Dismiss ), and transferred the cases to the District of Maine. FERC v. Silkman , 177 F.Supp.3d 683 (D. Mass. 2016) (ECF No. 66) ( Silkman I ).
On April 21, 2016, following transfer to the District of Maine, the Respondents answered FERC's petition. Resp'ts' Answer (ECF No. 72). That same day, the Respondents filed a motion requesting a scheduling conference and an order assigning the case to the complex track. Defs.' Mot. for Scheduling Order and Conf. (ECF No. 73).
On June 3, 2016, the Court held a scheduling conference. Minute Entry (ECF No. 84); Tr. of Proceedings (ECF No. 85). At the scheduling conference, the parties presented arguments concerning the procedures that should govern the Court's de novo review of the Commission's assessment orders. Tr. of Proceedings at 2:24–49:18. The Court ordered additional briefing from both parties. Id. at 46:6–48:7. On January 26, 2017, the Court issued an order regarding the procedures applicable to FERC's petition and assigned the case to the complex track. Order Regarding Procedures Applicable to Pet. for Order Affirming Assessment of Civil Penalties (ECF No. 95).
On February 15, 2017, the parties appeared telephonically for a conference of counsel before this Judge, and the Court issued an order staying the case pending a settlement conference. A settlement conference was held before Magistrate Judge Rich on March 31, 2017, but settlement was not achieved. Min. Entry (ECF No. 104).
On February 28, 2018, the Respondents filed a Motion for Summary Judgment (ECF No. 133) (Resp'ts' Mot. ) along with an accompanying Statement of Fact (ECF No. 136) (DSMF). FERC responded in opposition on March 30, 2018, FERC's Resp. in Opp. to Mot. for Summ. J. (ECF No. 140) (Pl.'s Opp'n ), and filed a response to the Respondents' statement of fact with a statement of additional facts that same day. FERC's Resp. to Statement of Fact with Statement of Additional Facts (ECF No. 141) (PRDSMF; PSAMF). On April 20, 2018, the Respondents replied to FERC's additional statement of fact and responded to FERC's requests to strike made in response to the Respondents' statement of fact. Defs.' Reply to Resp. to Mot. for Summ. J. (ECF No. 143) (Resp'ts' Reply ); Defs.' Reply Statement of Material Fact (ECF No. 144) (DRPSAMF).
Meanwhile, on February 28, 2018, FERC filed a cross-motion for partial summary judgment on the issue of the statute of limitations. Mot. for Partial Summ. J. regarding Statute of Limitations (ECF No. 134) (Pl.'s Mot. ). The Respondents responded in opposition on March 30, 2018. Defs.' Resp. in Opp'n to Mot. for Partial Summ. J. (ECF No. 138) (Resp'ts' Opp'n ). FERC replied on April 20, 2018. Reply to Resp. to Mot. for Partial Summ. J. (ECF No. 145) (Pl.'s Reply ).
On September 25, 2018, FERC filed an unopposed motion for leave to file supplemental authority. Mot. for Leave to File Notice of Supple. Information (ECF No. 152). The Court granted the motion on November 7, 2018. Order Granting Mot. for Leave to File Notice of Supple. Information (ECF No. 153). On November 8, 2018, FERC filed as supplemental authority a copy of the Fourth Circuit Court of Appeals' order granting interlocutory appeal in Federal Energy Regulatory Commission v. Powhatan Energy Fund., LLC , 286 F.Supp.3d 751, 754 (E.D. Va. 2017).
FERC is an administrative agency of the United States, organized and existing pursuant to the Federal Power Act (FPA), 16 U.S.C. §§ 791a et seq. FERC Pet. ¶ 13. FERC's Office of Enforcement (Enforcement) "initiates and executes investigations of possible violations of the Commission's rules, orders, and regulations relating to energy market structures, activities, and participants. Office of Enforcement (OE) , FERC, https://www.ferc.gov/about/offices/oe.asp (last visited December 18, 2017). Based on its investigations, Enforcement may submit reports to the Commission recommending that the Commission institute administrative proceedings. FERC's Opp'n to Resp'ts' Br. Concerning Disc. (ECF No. 88) at 4. Once the Commission authorizes an administrative proceeding, Enforcement's role shifts from investigator to litigator, and a "wall" goes up between the Commission and its Enforcement arm to prevent ex parte communication. Id.
ISO-New England (ISO-NE) is an independent, non-profit organization that works to ensure the day-to-day reliable operation of New England's bulk electric energy generation and transmission system by overseeing the fair administration of the region's wholesale energy markets. FERC Pet. ¶ 2. FERC regulates the markets that ISO-NE administers. Id.
Respondent Competitive Energy Services (CES) is a limited liability company organized under the laws of Maine with its principal place of business in Portland, Maine. Id. ¶ 15. It provides energy consulting and other services to clients throughout North America. Id. ¶ 35. Respondent Richard Silkman resides in Maine and is an employee and managing member of CES. Id. ¶ 14.
FERC alleges that the Respondents' wrongdoing occurred "from July 2007 until February 2008." DSMF ¶ 1; PRDSMF ¶ 1.
On December 2, 2013, FERC filed a Petition for an Order Affirming the Federal Energy Regulatory Commission's August 29, 2013 Orders Assessing Civil Penalties Against Richard Silkman and Competitive Energy Services, LLC.4 DSMF ¶ 2; PRDSMF ¶ 2. The petition was filed at least five years, ten months, and two days after the wrongdoing ceased.5 DSMF ¶ 3; PRDSMF ¶ 3.
Enforcement began an inquiry in February 2008 following a telephone call from the ISO-NE market monitoring unit regarding certain market participants' conduct relating to their participation in the ISO-NE Day Ahead Load Response Program (DALRP). In March 2008, after receiving a written referral from ISO-NE, Enforcement commenced a non-public investigation pursuant to Part 1b of the Commission's regulations (18 C.F.R. Part 1b) to determine whether certain market participants had engaged in fraudulent conduct in their participation in the DALRP. In November 2009, Enforcement commenced an investigation of Dr. Silkman individually, pursuant to Part 1b of the Commission's regulations for Dr. Silkman's conduct related to the DALRP, as memorialized in a November 4, 2009 letter sent to Dr. Silkman's counsel.6 DSMF ¶ 4; PRDSMF ¶ 4.
Enforcement staff, in their role as the Commission staff tasked with investigating potential violations of the FPA and the Commission's regulations, communicated with the Commission and certain members of its advisory staff during the investigation of the Respondents. The Commission initiated adversarial adjudicatory proceedings on July 17,...
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Fed. Energy Regulatory Comm'n v. Powhatan Energy Fund, LLC
...Cause Process more closely resemble an adjudicative "proceeding" than a prosecutor’s charging decision. See FERC v. Silkman (Silkman II) , 359 F. Supp. 3d 66, 121 (D. Me. 2019) (concluding that the Show Cause Process is "closer to [an ALJ hearing] than to a prosecutorial determination or ch......
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...the First Circuit have adopted this interpretation. See Powhatan, 949 F.3d at 904; Fed. Energy Reg. Comm'n v. Silkman (Silkman II), 359 F.Supp.3d 66 (D. Me. 2019); Fed. Energy Reg. Comm'n v. Silkman (Silkman I), 177 F.Supp.3d 683 (D. Mass. 2016); see also United States v. Meyer, 808 F.2d 91......
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