Powhatan’s zingers in FERC case

We’ve noted (here and here) the battle between Powhatan Energy Fund and the Federal Energy Regulatory Commission over a FERC investigation of Powhatan for vaguely defined “market manipulation.” A filing earlier this month by Powhatan in FERC proceedings (represented by Drinker Biddle) has some subheads taking a not-exactly-respectful tone seldom met with in high-stakes administrative proceedings (Response in Opposition To Order To Show Cause and Notice of Proposed Penalty, PDF):

  1. “Dr. Chen’s ‘Home Run’ Trading Strategy Is Not A ‘Post Hoc Invention’ Because, Among Other Things, 35 Is Less Than 50”
  2. “Dr. Chen’s Trades Were Not ‘Wash-like’ Or ‘Wash-type’ – Whatever The Heck That Means”
  3. “The Staff’s Stubborn Reliance On The Unpublished, NonPrecedential Amanat Case Is Just Lame”
  4. “Uttering the Phrase ‘Enron’ Or ‘Death Star’ Does Not Magically Transform The Staff’s Investigation”

The full document is here.


  • This is trying to persuade the FERC to take a position against their staff?

    IMHO, it is an epic failure. While the petitioner might be right, he certainly has not done anything to persuade the FERC to rule on his side.

    This may be the least persuasive piece of legal dribble I have ever read. It seems to me that the writer is inviting FERC to rule against his client simply so that they can sue in district court.

    • It seems to me that the writer is inviting FERC to rule against his client simply so that they can sue in district court.

      I get the feeling that this is exactly what they are doing. From the intro it appears they have no hope that the ruling will not go against them even if they play nice (I think it implies at one point that the staff member who had been leading the charge is now on the commission?). They are deliberately being dismissive to get publicity and to bolster their case that the entire thing is an unconstitutional shake-down when it inevitably hits the courts.

      • Jen,

        You may be correct. But that brief must have taken hours to write. The only thing it could possibly do is get publicity for their clients. And, presumably, their clients are paying for it. I hope it is worth the client’s money.

        FWIW, I don’t know who is right or wrong on the issue. All I have read is this filing, which does not even explain what the client is accused of doing (or at least does not explain well).

  • Maybe this is what you need to do to wake up a sleepy regulator.

  • If you’re interested in learning more about FERC’s investigation of Powhatan, please visit http://www.ferclitigation.com. There’s an overview video on the homepage that’s particularly insightful. Lots of other stuff too. Enjoy!

    Kevin Gates
    VP of Managing Member
    Powhatan Energy Fund LLC

  • I think the brief is inflammatory (probably justifiably) but very persuasive on the key substantive points. It certainly draws attention. The upside of that approach is that’s actually interesting to read. It’s very difficult to write a brief the reader won’t want to put down, but Drinker managed to do it in this case.

  • Mr. Gates,

    You actually paid good money for this? Boy, I want you as a client.

    I don’t have any opinion on whether FERC is right or not. I just don’t think that this is an effective litigation tactic if you want to avoid going to court. If you wanted to win at FERC, this was not the way do do it. If you want to go to court, why waste the money?

    All I can figure is that you want revenge (IMHO, this brief does not do it). Or you wanted to be funny.

    Best regards.

    • Thanks for sharing your interesting thoughts, Allan.

      • {/snark on}

        Little boy in a coversation with a big bully

        LB: Why did you hit me in the mouth? You can’t do that.

        BB: Because I wanted to. Here is another.

        LB: You broke my nose

        BB: So?

        LB: I really don’t think you should hit me for no reason. I will go to the pollice if you hit me again. You really are a pathetic imbecile and your mother should have aborted you.

        BB: Really? I think I will shoot you in the kneecap now.

        Do you think the little boy with the broken head feels any better now that the bully is in jail for assault? I mean, really, he could have gotten away with a bloody lip and a broken nose, with the same result. Instead, he got himself a broken kneecap. He was arrogant. I don’t sympathize with the bully or excuse what he did. But, should the boy have expected further injury, knowing he was antagonizing a person he knew was violent?

        {/snark off}

        This litigation must cost money, time, and effort. I just don’t see how antagonizing the FERC staff does anyone any good.

        On the other hand, you and your brother are really, really wealthy. And your trading techniques seemed to be very clever. Perhaps there is something to learn here. Obviously, I am too obtuse to understand the strategic thinking you are employing. Any help?

        • Allan: We’re just trying to defend ourselves. That’s it. Kevin

  • I’ve been following this one! Facing a shakedown from a regulator with whom they didn’t need to maintain a good relationship, these guys made the decision to fight, and they’re doing it in the court of public opinion.

    They’ve released their correspondence and legal filings on their website, they’ve made a slick video with some very credentialed experts saying they did no wrong, they actively Tweet. I’d expect no less than blunt legal filings from these guys.

    Google “Powhatan FERC” to see how effective they have been at generating press and awareness. They’ve reached the Wall Street Journal and Forbes. Their names have been spoken by Senators.

    The tone of the letter might not be your particular style, but a lot of people might not have otherwise read it. It’s hard to argue with the success they’ve had at raising awareness with tactics like this. They’ve brought a lot of light to what is usually a hustle in a darkened backroom.

  • I’ve certainly written snarky briefs and letters to regulators, but this one goes a bit beyond snark and it has to be purposeful. The firm that authored the brief is well respected in DC circles and I doubt they would have written this brief with this over-the-top sarcasm contrary to their client’s direction. The brief is funny, full of common sense argument, but I think it loses some effectiveness by use of words like “lame.”