An administrative law judge (ALJ) has ordered FERC trial staff to show cause why it should not be sanctioned for failing to turn over documents in a complaint proceeding involving Northern Natural Gas Co. despite his repeated request.

On March 16, ALJ John P. Dring said the trial staff was directed to provide a proper privilege log — working index of documents that have been withheld or which contain redactions — to him and all other participants in the cases, as well as an affidavit, after staff asserted privilege following a request for data by Northern Natural. The Federal Energy Regulatory Commission (FERC) trial staff responded to Dring’s request for the log on March 26, but the judge said it was inadequate.

As a result, he ordered FERC staff on April 7 to file a “modified privilege log” to support its claim of deliberative process privilege. But instead of complying with Dring’s request, FERC trial staff filed a motion asking Chief Judge Curtis Wager to suspend Dring’s order, pending a final decision on an appeal that staff said it planned to file.

“Staff’s motion to the chief judge was an inappropriate extrajudicial action. Staff’s behavior throughout this process has also indicated a general lack of candor and lack of good faith amounting to ‘contumacious conduct.’ Failing to produce a privilege log, as well as its inappropriate motion to the chief administrative law judge, are causing undue delay in this proceeding,” said Dring in the order to show cause.

Trial staff was directed to show cause as to why it should not be sanctioned for its failure to submit a proper privilege log; its failure to comply with Dring’s April 7 order; taking extrajudicial action by petitioning the chief judge; and a general lack of candor and good faith, Dring said.

Staff has until close of business on April 29 to reply, and it will also have an opportunity to be heard at oral arguments on May 4.

“If staff is unable to show cause as to why it should not be sanctioned for failing to comply with my orders and for its general conduct, I will request that the chief judge…stay the proceeding until my order is obeyed, and/or recommend to the Commission that staff counsel be removed from the proceeding for contumacious conduct.”

The ALJ proceeding stems from a November order in which FERC initial formal Section 5 investigations of three pipelines — Northern Natural Gas, Natural Gas Pipeline Co. of America LLC (NGPL) and Great Lakes Gas Transmission Ltd. — based on preliminary studies that indicate the three may be over-recovering their cost of service by more than 20% (see Daily GPI, Nov. 20, 2009). If so, their rates would no longer be just and reasonable.

In February the pipelines refuted FERC’s charges (see Daily GPI, Feb. 8).

The staff’s preliminary investigation of financial information submitted by the pipelines for 2008 indicates that NGPL may have achieved a return on equity (ROE) of 24.5% based on an over-recovery of $149 million (RP-10-147), while Northern Natural’s estimated ROE was 24.36% (RP10-148) with an over-recovery of $167 million and Great Lakes ROE was 20.83% with a FERC-estimated over-recovery of $56 million (RP10-149).

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