Federal Energy Regulatory Commission v. Vitol Inc ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 FEDERAL ENERGY REGULATORY No. 2:20-CV-00040-KJM-AC COMMISSION, 12 Plaintiff, 13 ORDER v. 14 VITOL, INC., et al., 15 Defendants. 16 17 Third parties move for leave to file a brief as amici curiae. ECF No. 42. 18 Specifically, Edison Electric Institute (“EEI”), Electric Power Supply Association (“EPSA”), and 19 Energy Trading Institute (“ETI”) (collectively “Amici”) seek leave to file a brief in support of 20 defendant’s motion to dismiss, ECF No. 30. For the foregoing reasons, the court GRANTS the 21 motion. 22 I. BACKGROUND 23 On October 25, 2019, plaintiff Federal Energy Regulatory Commission (“FERC”), 24 unanimously issued a Penalty Order, Compl., Ex. 1 (“Penalty Order”), ECF No. 1-1, against 25 ///// 26 ///// 27 ///// 28 ///// 1 defendants Vitol, Inc.1 and Federico Corteggiano.2 FERC issued the Penalty Order after 2 determining defendants violated Federal Power Act (FPA) § 222(a), 16 U.S.C. § 824v(a), and 3 FERC’s Anti-Manipulation Rule, 18 C.F.R. § 1c.2, by selling physical power at a loss in 4 California Independent System Operator’s (CAISO) wholesale electric market to eliminate 5 congestion costs in the Cragview LMPs3 that defendants expected to cause losses in their CRR4 6 positions. Compl. ¶ 4, ECF No. 1; id. ¶¶ 28–34 (providing background on FERC’s enforcement 7 investigation). FERC ordered Vitol to pay a civil penalty of $1,515,738 and disgorge $1,227,143 8 in unjust profits, plus applicable interest. Id. ¶ 4. FERC also ordered Corteggiano to pay a 9 $1,000,000 civil penalty. Id. Defendants have failed to pay the penalties and disgorge the profits 10 assessed by the Commission within the 60-day payment period provided for in § 31(d)(3)(B) of 11 the FPA, 16 U.S.C. § 823b(d)(3)(B), which ended on December 24, 2019. Id. ¶ 42. 12 On January 6, 2020, FERC filed a complaint under FPA § 31(d), 16 U.S.C. 13 § 823b(d) (2018), asking this court to affirm and enforce FERC’s October 25, 2019 Order. 14 See generally Compl. 15 16 17 1 Defendant Vitol Inc., a Delaware corporation with its principal place of business in Houston, Texas, is a direct, wholly-owned subsidiary of Vitol Holding SARL, which in turn is a 18 direct, wholly-owned subsidiary of Vitol Holding BV, a privately held Dutch company engaged in physical distribution and trading of crude oil and petroleum products, energy and other 19 commodities. Compl. ¶ 5. 20 2 Defendant Federico Corteggiano is employed at Vitol Inc. as a trader of purely financial energy-related products. During the relevant period, Corteggiano traded CRRs in CAISO’s 21 wholesale electric market. Corteggiano holds a Ph.D. in power system engineering and has 22 extensive experience trading financial products in power markets and resides in Katy, Texas. Id. ¶ 6. 23 3 The Cragview node is the scheduling and pricing point for power transfers, which in 24 CAISO’s model of transmission network is an interface between CAISO and the PacifiCorp-West control area. Id. ¶ 24. CAISO operates a competitive wholesale electricity market that uses 25 locational marginal prices (LMPs) for settlements of purchases and sales at specific locations. Penalty Order at 6. 26 4 CRRs are financial instruments issued by CAISO that allow CAISO market participants 27 to manage their exposure to transmission congestion costs in the day-ahead market. CRRs are allocated to load-serving entities and also offered for purchase in competitive monthly and annual 28 auctions. CRRs have a designated quantity, stated in megawatts (MWs), and term. Id. at 8. 1 On May 4, 2020, the Edison Electric Institute (“EEI”), Electric Power Supply 2 Association (“EPSA”), and Energy Trading Institute (“ETI”) (collectively “Amici”) filed the 3 instant motion requesting leave to file a brief in support of defendants’ motion to dismiss. Mot., 4 ECF No. 42. Plaintiff opposes. Opp’n, ECF No. 57. The court submitted the motion without a 5 hearing and resolves it here. 6 II. LEGAL STANDARD 7 The district court has broad discretion regarding the appointment of amici. 8 Hoptowit v. Ray, 682 F.2d 1237, 1260 (9th Cir. 1982); In re Roxford Foods Litig., 790 F. Supp. 9 987, 997 (E.D. Cal. 1991) (“The privilege of being heard amicus rests solely within the discretion 10 of the court” (citation omitted)). “An amicus brief should normally be allowed” when, among 11 other considerations, “the amicus has unique information or perspective that can help the court 12 beyond the help that the lawyers for the parties are able to provide.” Cmty. Ass’n for Restoration 13 of Env’t (CARE) v. DeRuyter Bros. Dairy, 54 F. Supp. 2d 974, 975 (E.D. Wash. 1999) (citing 14 N. Sec. Co. v. United States, 191 U.S. 555, 556 (1903)). 15 While “[h]istorically, amicus curiae is an impartial individual who suggests the 16 interpretation and status of the law, gives information concerning it, and advises the Court in 17 order that justice may be done, rather than to advocate a point of view so that a cause may be won 18 by one party or another[,]” CARE, 54 F. Supp. 2d at 975, the Ninth Circuit has said “there is no 19 rule that amici must be totally disinterested.” Funbus Sys., Inc. v. State of Cal. Pub. Utilities 20 Comm’n., 801 F.2d 1120, 1125 (9th Cir. 1986) (citation omitted); Hoptowit, 682 F.2d at 1260 21 (upholding district court’s appointment of amicus curiae, even though amicus entirely supported 22 only one party’s arguments). 23 III. DISCUSSION 24 Here, the Amici “collectively represent the electricity companies that handle the 25 bulk of the nation’s electricity and are subject to [FERC’s] wider Federal Power Act jurisdiction.” 26 Mot. at 3. “EEI is the association that represents U.S. investor-owned electric companies, 27 international affiliates and industry associates worldwide,” and its members “own about 75% of 28 transmission system facilities in the country.” Mot. at 3. “EPSA’s members include 16 1 companies, along with state and regional partners, that represent the competitive power industry 2 in their respective regions.” Id. at 4. “ETI is a non-profit organization” that “represents a diverse 3 group of energy market participants, ranging from asset owning entities, marketers, hedge funds, 4 exchanges and companies that support participation in the competitive markets.” Id. Amici seek 5 leave to explain to the court their position that the Fourth Circuit incorrectly determined the 6 operation of U.S.C. § 2462 in Federal Energy Regulatory Commission v. Powhatan Energy Fund, 7 LLC, 949 F.3d 891 (4th Cir. 2020).5 In their proposed amicus brief, Amici assert “the industry 8 does NOT agree with the Fourth Circuit’s analysis” and provides their analysis of the accrual of 9 the statute of limitations. Mot. at 4–5. 10 The court finds Amici’s proposed brief provides a focused legal analysis on the 11 statute of limitations issue under 28 U.S.C. § 2462 as relevant to defendants’ motion to dismiss. 12 See Mot. to Dismiss, ECF No. 30, at 20. Amici’s brief is likely to assist the court in making a 13 well-informed decision regarding the questions of statutory construction it will need to address. 14 NGV Gaming, Ltd. v. Upstream Point Molate, LLC, 355 F. Supp. 2d 1061, 1067 (N.D. Cal. 2005) 15 (“District courts frequently welcome amicus briefs from non-parties concerning legal issues that 16 have potential ramifications beyond the parties directly involved”) (citation omitted). 17 Accordingly, Amici’s motion to file an amicus brief is GRANTED. 18 IV. CONCLUSION 19 The motion is GRANTED. This order resolves ECF No. 42. 20 IT IS SO ORDERED. 21 DATED: August 8, 2020. 22 23 24 25 26 27 5 The court notes only the Fourth Circuit has addressed the application of the statute of limitations, 28 U.S.C. § 2462 (2018), to the Commission’s claims for civil penalties. See Opp’n 28 at 5 n.3.