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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. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

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