On August 16, FERC filed a response to the Barclays filing of supplemental authorities (the recent decisions in the Maxim Power and City Power cases on de novo review). FERC states that it “respectfully disagrees” with those courts’ holdings that Section 31(d)(3) of the Federal Power Act requires application of the Federal Rules of Civil Procedure and a regular civil trial. In addition, FERC points to some of the language from the City Power decision supporting its position on liability, including that: (a) FERC is not required to show harm; (b) traders are presumed to be trading based on their best estimates of the security’s economic value, and trading for other purposes can be deceptive; and (c) de novo review does not eliminate Chevron deference.
On August 17, FERC filed its complaint against ETRACOM and Michael Rosenberg in the U.S. District Court for the Eastern District of California. As we previously reported in June, FERC issued an Order Assessing Civil Penalties finding that ETRACOM and Rosenberg violated FERC’s anti-manipulation rule through a scheme to submit virtual supply transactions at the New Melones intertie at the CAISO border in order to affect power prices and economically benefit ETRACOM’s Congestion Revenue Rights sourced at that location. FERC assessed $2,400,000 against ETRACOM and $100,000 against Rosenberg in civil penalties, plus $315,072 in disgorgement. Since ETRACOM elected the de novo review procedures under Section 31(d)(3) of the Federal Power Act and then did not pay the penalty within 60 days, FERC instituted the instant proceeding in district court seeking an order affirming the assessment of a civil penalty. The case has been assigned to Judge Troy L. Nunley, the same judge presiding over the Barclays case.