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Governor: 1-year cooling off period applies to ALJs

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The governor today fired the state's top utility regulator, citing ethical concerns about how a former Administrative Law Judge presided over cases involving a regulated energy company leading up to his taking a job there.

But even more significant for the Indiana legal community is how Gov. Mitch Daniels’ actions are telling ALJs that the spirit of a mandatory one-year cooling-off rule applies to them, and they should be careful about considering outside employment while presiding as neutral parties over these administrative matters.

Terminating David Lott Hardy as Indiana Utility Regulatory Commission chairman, the governor specifically pointed to the reason being the recent departure of general counsel Scott Storms who took a job in late September as a lawyer in Duke Energy’s regulatory division.

The attorney admitted to the practice of law in 1989 was the agency’s chief legal advisor and served as ALJ, and the governor said his taking a job somewhere directly involved in cases he’d recently presided over raised the “appearance of impropriety.”

The governor’s general counsel David Pippen sent a memo to all agency heads outlining an internal review that found Storms had been communicating with Duke about a job even while he was presiding over administrative hearings concerning the energy company.

"Additionally, the agency head was aware of the communications and did not remove the lawyer from matters for which the lawyer was now conflicted,” Pippen said in his memo, saying that Daniels has directed that administrative opinions over which Storms presided be reopened and reviewed “to ensure no undue influence was exerted in the decisions.”

In the memo, Pippen wrote that the governor considers the one-year cooling off period to apply to anyone at the ALJ level, and that this matter specifically has been referred to the Inspector General to determine if any laws were broken or whether misinformation was presented to the state Ethics Commission.

Though it’s not outlined which Duke cases are at issue, Storms had presided over a handful of matters involving Duke – most significantly one relating to cost overruns at the company’s Edwardsport generating plant. After questions arose late last month about Storms’ departure and new position, Duke said that he and the company had previously sought an advisory opinion from the state ethics commission on whether Storms would be subject to that one-year cooling-off period before being allowed to take a job at Duke. The commission found it didn’t apply because Storms wasn’t directly involved in the decision-making, but the panel also found that he couldn’t be involved as an attorney at Duke in any matters he might have presided over while working as an ALJ for the state agency.

But with this announcement, the fallout worsened as Duke said it was placing Storms on administrative leave “pending the completion of a full evaluation.” The company did the same with its president and chief executive officer of Indiana operations, Mike Reed, who had started with Duke in June after serving as commissioner of the Indiana Department of Transportation and previously serving as executive director of the IURC under Daniels from 2006 to 2009.

Hearing about the IURC-specific issues, Indianapolis attorney and longtime legal ethics advisor John Conlon said this goes to a broader issue about how state agency attorneys also function as ALJs and he said it’s ironic in this case that “the appearance of impropriety” is being cited by the governor.

“I think that there is an inherent conflict when an attorney who works for a state department also functions as a supposedly neutral ALJ,” he said. “Unfortunately, these types of situations go on routinely throughout state government.”

Conlon said he wouldn’t be surprised if disciplinary charges are explored, but that it would be up to someone to file a complaint before the Disciplinary Commission for that to happen. No formal disciplinary actions are listed on the state’s appellate court docket for Storms, and the commission is prohibited from speaking about any issue that may or may not be pending.

As part of the announcement today, Pippen reiterated that no ALJ who presides over information-gathering or order-drafting matters should engage in communications with regulated industries regarding potential jobs without recusing him or herself from cases involving that industry.

Daniels immediately appointed as the new IURC chairman Jim Atterholt, who serves on the commission and is the state’s former insurance commissioner.

Indianapolis Business Journal reporter Chris O’Malley contributed to this story.

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  1. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  2. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  3. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  4. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

  5. No, Ron Drake is not running against incumbent Larry Bucshon. That’s totally wrong; and destructively misleading to say anything like that. All political candidates, including me in the 8th district, are facing voters, not incumbents. You should not firewall away any of voters’ options. We need them all now more than ever. Right? Y’all have for decades given the Ds and Rs free 24/7/365 coverage of taxpayer-supported promotion at the expense of all alternatives. That’s plenty of head-start, money-in-the-pocket advantage for parties and people that don’t need any more free immunities, powers, privileges and money denied all others. Now it’s time to play fair and let voters know that there are, in fact, options. Much, much better, and not-corrupt options. Liberty or Bust! Andy Horning Libertarian for IN08 USA House of Representatives Freedom, Indiana

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