Commissioner James Danly Statement
August 28, 2023
Docket No. EL18-152-003
I dissent from this order[1] to the extent to which it sets forth arguments that the Supreme Court has rejected regarding what actions can cure constitutional defects, if any, in the appointment of Administrative Law Judges (ALJs). Specifically, I dissent over the Commission’s arguments that either an after-the-fact ratification of the administrative law judge’s (ALJ) appointment or a full review and adoption of the ALJ’s findings by the Commission could remedy any constitutional infirmity in the ALJ’s appointment. Those portions of the order which rely upon reasoning that has been rejected by the Supreme Court are necessarily surplusage—surplusage that introduces legal risk. I also dissent over this order’s many other errors,[2] including the fact that the majority has declined to set aside the prior order in full.[3]
With respect to the issue of the constitutionality of the appointment of the ALJ at issue here, either the ALJ was constitutionally appointed by the Chairman, or the litigants are entitled to a new hearing before a properly appointed ALJ. I have long believed that Congress has vested the power to appoint ALJs in the Chairman, based on a plain reading of what I see as a very plain statute:[4] “The Chairman shall be responsible on behalf of the Commission for the executive and administrative operation of the Commission, including . . . the appointment and employment of hearing examiners . . . .”[5] Not much ambiguity there. This simple appeal to the text of the Department of Energy Organization Act, which expressly provides the power to appoint ALJs to the Chairman, is not only the sole argument upon which the majority should rely, it is the only argument upon which the majority can rely.
The majority purposelessly insists upon advancing arguments that the Supreme Court has unambiguously and pointedly rejected: that neither an after-the-fact ratification of an ALJ’s appointment nor the full Commission’s review and adoption of an ALJ’s findings could remedy the appointment’s constitutional infirmity.[6] Those arguments failed for the Securities and Exchange Commission (SEC) and they fail here. The SEC attempted both after-the-fact ratification of the ALJ’s appointment and full Commission review and adoption of the ALJ’s finding in Lucia.[7] The SEC lost on both.
And it is not as though the Supreme Court left us to figure out the remedy on our own. They provided a simple cure, holding that the “‘appropriate’ remedy” for “one who makes a timely challenge to the constitutional validity of the appointment of an officer who adjudicates his case” is “a new ‘hearing before a properly appointed’ official.”[8]
Thus, neither the after-the-fact ratification of the ALJ’s appointment nor the full Commission’s review and adoption of the ALJ’s finding would remedy any constitutional issue (if there is one,[9] and I say there is not given the ALJ’s appointment by the Chairman).
For these reasons, I respectfully concur in part and dissent in part.
[1] La. Pub. Serv. Comm’n v. Sys. Energy Res., Inc., 184 FERC ¶ 61,097 (2023) (Opinion No. 581-A).
[2] See Opinion No. 581-A, 184 FERC ¶ 61,097. As I have previously explained, the Commission had no authority to abrogate the underlying agreements or to require System Energy Resources, Inc. (SERI) to seek approval of its Lease Renewal under section 203 of the Federal Power Act (FPA), 16 U.S.C. § 824b(a)(1)(D). La. Pub. Serv. Comm’n v. Sys. Energy Res., Inc., 181 FERC ¶ 61,243 (2022) (Opinion No. 581). Requiring SERI to seek approval of the Lease Renewal violated both the FPA and Mobile-Sierra. Id., 181 FERC ¶ 61,243 (Danly, Comm’r, dissenting at PP 8-11). Likewise, denying SERI full rate recovery is unlawful and is based on flawed reasoning. Id. (Danly, Comm’r, dissenting at PP 11-14).
[3] I also concur in part in today’s issuance to the extent that it sets aside the prior order in part and grants clarification in part. See, e.g., Opinion No. 581-A, 184 FERC ¶ 61,097 at PP 57, 60, 62, 64-65, 81 (allowing certain rate recovery), 84 (not requiring refunds from January 1, 2014, through July 15, 2015), 132 (regarding Accumulated Deferred Income Taxes (ADIT) and 120 (granting clarification of certain accounting issues)).
[4] 42 U.S.C. § 7171(c).
[5] Id.
[6] Opinion No. 581-A, 184 FERC ¶ 61,097 at PP 130-133, 135 & n.282.
[7] Lucia v. SEC, 138 S. Ct. 2044 (2018).
[8] Id. at 2055 (citations omitted). The Supreme Court further explained, “[a]nd we add today one thing more. That official cannot be Judge Elliot, even if he has by now received (or receives sometime in the future) a constitutional appointment. Judge Elliot has already both heard Lucia’s case and issued an initial decision on the merits. He cannot be expected to consider the matter as though he had not adjudicated it before. To cure the constitutional error, another ALJ (or the Commission itself) must hold the new hearing to which Lucia is entitled.” Id. (footnotes omitted).
[9] As petitioners note, there may be constitutional issues related to ALJs’ statutory removal protections. See SERI January 23, 2023 Request for Rehearing and Motion for Confirmation at Part VIII.A; see also Opinion No. 581-A, 184 FERC ¶ 61,097 at PP 127-29, 134. The Supreme Court may soon address this issue. See Jarkesy v. SEC, 34 F.4th 446 (5th Cir. 2022), cert. granted, SEC v. Jarkesy, 143 S. Ct. 2688 (Jun. 30, 2023).