The estate of one of the owners of GreenHat Energy moved that FERC drop its enforcement action and investigate two of its employees after it emerged last week that Office of Enforcement lawyers violated regulations related to the electricity market manipulation case (IN18-9).

Lawyers for the estate of Andrew Kittell, one of three owners of GreenHat, made the filing on Tuesday, arguing that a series of emails between Enforcement’s Division of Investigations (DOI) lawyers Thomas Olson and Steven Tabackman were “not only unlawful, but deceptive.” FERC released the emails Friday after Olson, who is part of the litigation staff in the GreenHat proceeding, disclosed them to Enforcement management.

In May, the commission issued a show-cause order to GreenHat and its owners with $229 million in potential civil penalties over the company’s 890 million MWh default of its financial transmission rights portfolio in PJM in 2018. (See GreenHat Energy, Owners Face $229M FERC Fine.)

In a report released as part of the order, Enforcement staff alleged that GreenHat’s owners violated the Federal Power Act and PJM’s tariff and Operating Agreement by engaging in a “manipulative scheme” in the FTR market. The order directed the participants to demonstrate why GreenHat should not be assessed a civil penalty of $179 million and owners John Bartholomew and Kevin Ziegenhorn assessed civil penalties of $25 million each. GreenHat, Bartholomew, Ziegenhorn and the estate of Kittell were also required to explain why they should not have to disgorge $13.1 million in unjust profits, plus interest.

“As we already have shown, the merits case against the estate is fatally flawed,” Kittell’s lawyers said. “Enforcement’s conduct is disturbing. And the only remaining purpose the commission might have for continuing this matter — stripping Andrew Kittell’s widow and two children of their limited remaining assets, when it is this investigation that took Andrew’s life — is a distastefully misguided use of the commission’s enforcement powers.”

In July, the estate told FERC that Kittell, 50, killed himself by jumping off the San Diego-Coronado Bridge in California on Jan. 6. His death had been made public in April when his obituary was published, but the cause of death had been unknown.

FERC Emails

Olson notified the commission that he received emails through his personal Gmail accounts on Sept. 17 and 18 from Tabackman, who was serving as decisional staff in the GreenHat case. The two were discussing a pair of U.S. Supreme Court case decisions that Tabackman believed could strengthen FERC’s case.

Tabackman urged Olson not to reveal where he received the information on the cases, saying, “You never heard that here.”

Olson questioned Tabackman if he sent information on 1940’s U.S. v. Summerlin and 2006’s Marshall v. Marshall with the GreenHat case in mind, “or something else?”

Tabackman responded, “Yes — you should be familiar with them — though you should not mention how you came upon them.”

Olson received another email from Tabackman on Sept. 18, which referenced his work with the decisional team, and he realized the emails “constituted a violation of the commission’s separation-of-functions regulation.”

The regulation does not allow any employee assigned to work on an Enforcement proceeding or assist in a trial “to participate or advise as to the findings, conclusion or decision, except as a witness or counsel in public proceedings.”

FERC on Friday also removed Tabackman as a counsel of record in its federal court case.

Kittell Estate and FERC Response

In its motion Tuesday, the Kittell estate argued that the commission should drop all Enforcement action against it, ban Tabackman and Olson from any future involvement in the investigation and “order other offices within the commission to investigate what happened.”

“Tabackman and Olson both knew at the time they were on opposite sides of the wall,” Kittell’s lawyers said “They used Gmail instead of official FERC email to avoid detection. They used words that confirm deceptive intent.”

The estate also cited its reply in August to the show-cause order, arguing that Enforcement officials made statements that “sought to intentionally deceive the commission about the mathematical fact that the bilateral trades actually reduced the size of the default, thus benefiting PJM stakeholders.”

“Normally a litigant responds when facing allegations that it filed an intentionally deceptive pleading,” Kittell’s lawyers said. “But Enforcement never did, conceding our point. While everyone owes a duty of candor to the commission, that duty is even higher for the commission’s own lawyers. That duty was breached here.”

On Wednesday, litigation staff responded to the motion by the Kittell estate, saying Enforcement “followed proper procedure” through the disclosure of the emails. “This, and not termination of the proceeding or removal of litigation staff members, is the appropriate remedy for this violation,” they said.