Federal Energy Regulatory Commission v. Silkman (233 F. Supp. 3d 201, 2017)

United States District Court for the District of Maine 2017-01-26

Commerce and Trade Government Organization and Employees

Citations

Full opinion text

ORDER REGARDING PROCEDURES APPLICABLE TO PETITION FOR ORDER AFFIRMING ASSESSMENT OF CIVIL PENALTIES

JOHN A. WOODCOCK, JR., UNITED STATES DISTRICT JUDGE

On July 17, 2012, the Federal Energy Regulatory Commission (FERC or Commission) issued orders to show cause to an energy consulting firm and its managing member (Respondents), requiring them to show cause why the Commission should not (1) find them in violation of section 222 of the Federal Power. Act (FPA), 16 U.S.C. § 824v, and FERC’s rule against energy market manipulation (the Anti-Manipulation Rule); (2) assess civil , penalties against the firm and the managing member; and (3) require the firm to disgorge unjust profits.

Pursuant to the FPA, the Respondents, upon receiving the orders to show cause, faced a choice of procedures. First, under 16 U.S.C. § 823b(d)(2), the Respondents could proceed to a hearing before an Administrative Law Judge (ALJ) and appeal any unsatisfactory decision to the Commission and, eventually, to the United States Court of Appeals in accordance with the Administrative Procedure Act (APA). Alternatively, under 16 U.S.C. § 823b(d)(3), the Respondents could bypass a hearing with an ALJ and request the Commission to make a prompt ruling on the proposed penalties. If the Commission imposed a penalty, and the Respondents failed to pay within sixty days, the Commission could institute an action in the district court for an order affirming the Commission’s penalty assessment. The FPA states that, in ruling on the Commission’s penalty assessment, the district court “shall have the authority to review de novo the law and the facts involved[.]”

In this case, the Respondents opted for an immediate ruling from the Commission under § 823b(d)(3), and on August 29, 2013, the Commission issued assessment orders imposing the proposed penalties. The Respondents failed to pay the penalties within sixty days. Accordingly, the Commission filed a petition for an order affirming its assessment orders.

In a matter of first impression in the District of Maine, this Court must determine the applicable procedures that govern the Court’s de novo review of the Commission’s assessment orders. After considering the compelling arguments and authorities both parties bring to bear on the issue, the Court has resisted the temptation to make a grand pronouncement about the scope of de novo review under § 823b(d)(3) and instead concludes, based on the specific circumstances of this case, that it will treat this matter as an ordinary civil action subject to the Federal Rules of Civil Procedure.

I. BACKGROUND

A. Procedural History

1. Proceedings in the District of Massachusetts

On December 2, 2013, FERC filed a petition in the District of Massachusetts for an order affirming its assessment orders. Pet. for Order Affirming FERC’s Aug. 29, 2013 Orders Assessing Civil Penalties Against Richard Silkman and Competitive Energy Services, LLC (ECF No. 1) (FERC Pet.). On December 19, 2013, the Respondents filed a motion to dismiss, Resp’ts’ Mot. to Dismiss (ECF No. 8), and a motion to transfer to the District of Maine. Resp’ts’ Mot. to Transfer (ECF No. 9). On January 9, 2014, FERC filed oppositions to the motion to dismiss, FERC’s Opp’n to Resp’ts’ Mot. to Dismiss (ECF No. 18), and the motion to transfer. FERC’s Opp’n to Resp’ts’ Mot. to Transfer (ECF No. 19).

On March 3, 2014, Judge Douglas Wood-lock notified the parties of an initial scheduling conference and ordered the parties to submit a joint statement regarding scheduling pursuant to Massachusetts Local Rule 16.1. Notice of Scheduling Initial Scheduling Conf., Order for Joint Statement and Certifications, and Order for Elec. Filing (ECF No. 20). The parties filed their joint statement on March 26, 2014, highlighting their disagreement about the nature and scope of the applicable procedures. Joint Rep. Pursuant to Fed. R. Civ. P. 26(f) and Loc. R. 16.1 (ECF No. 22) (Joint Rep.).

At the scheduling conference on April 3, 2014, Judge Woodlock denied the motion to transfer without prejudice and scheduled a hearing on the motion to dismiss. Elec. Clerk’s Notes (ECF No. 23). Additionally, Judge Woodlock ordered initial disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1) and requested additional briefing regarding how the Court should conduct a “review de novo” under § 823b(d)(3). Id. The Respondents filed a supplemental brief on procedure on May 9, 2014. Resp’ts’ Suppl. Br. on Pro. (ECF No. 28) (Resp’ts’ Suppl. Br.). FERC responded on June 6, 2014. FERC’s Mot. for Leave to Cross-File Contours of the Case Resp., Attach. 1, FERC’s Resp. to Resp’ts’ Mem. Regarding Ct. ’s Auth. to Review De Novo Comm’n’s Orders Assessing Civ. Penalties Against Resp’ts’ (ECF No. 37) (FERC’s Suppl. Resp.).

On July 18, 2014, Judge Woodlock heard arguments on the motion to dismiss and the supplemental briefs on procedure, as well as additional arguments regarding transfer to the District of Maine. Elec. Clerk’s Notes (ECF No. 43); Tr. of Mot. Hr’g (ECF No. 44). Following the hearing, on April 2, 2015, the Respondents filed a second supplemental brief on the applicable procedures. Resp’ts’ Second Suppl. Brief on Pro. (ECF No. 52) (Resp’ts’ Suppl. Br. II).

The case was effectively stayed pending resolution of related issues in the United States Supreme Court and the United States Bankruptcy Court for the District of Maine. By April 5, 2016, both matters were resolved, and the proceedings continued. On April 11, 2016, Judge Woodlock denied the Respondents’ motion to dismiss, FERC v. Silkman, No. 1313054DPW, 2016 U.S. Dist. LEXIS 48409 (D. Mass. April 11, 2016) (ECF No. 65), and transferred the cases to the District of Maine for further proceedings. FERC v. Silkman, No. 1313054DPW, 2016 U.S. Dist. LEXIS 48401 (D. Mass. Apr. 11, 2016) (ECF No. 66).

2. Proceedings in the District of Maine

On April 21, 2016, following transfer to the District of Maine, the Respondents filed an answer to FERC’s petition. Defs.’ Answer (ECF No. 72). That same day, the Respondents filed a motion requesting a scheduling conference and an order assigning the case to the complex track. Defs.’ Mot. for Scheduling Order and Conf. (ECF No. 73) (Resp’ts’ Mot.). Along with their motion, the Respondents filed a declaration from their attorney, Peter Brann, detailing.- the Respondents’ experiences throughout the FERC investigation. Mot. fpr.Complex Track, Attach. 1, Peter Brann Deal. (ECF No. 73) (Brann Decl). On April 28, 2016, FERC responded. FERC’s Resp. to Resp’ts’ Mot. for Scheduling Order and. Conf.- (ECF No. 74) (FERC’s Resp.). The Respondents replied on May 4, 2016. Defs. ’ Reply Br. in Supp. of Mot. for Scheduling Order and Conf. (ECF No. 79) (Resp’ts’Reply).

■ On June 3, 2016, the Court held a scheduling conference. Minute Entry (ECF No. 84); TV. óf Proceedings (ECF No. 85). At the scheduling conference, the parties presented arguments concerning the procedures that should govern the Court’s de novo review of the Commission’s assessment orders. Tr. of Proceedings at 2:24-49:18. The Court ordered additional briefing from the Respondents’ regarding (1) the additional documents they wish to obtain from the agency’s investigative record, and (2) any additional discovery they require to present the Court with a complete record for de novo review. Id. at 46:6-47:2. The Court requested that FERC file a responsive brief to explain (1) why the Respondents are not. entitled to discovery as a matter of law, and (2) why the Court should rely solely on FERC’s administrative record in reviewing de novo the Commission’s assessment orders. Id. at 47:25-48:7.

The Respondents filed their discovery brief on July 8, 2016. Defs. ’ Br. Concerning Disc. (ECF No. 86) (Resp’ts’ Disc. Br.). On July 22, 2016, the Respondents filed a supplemental brief alerting the Court to FERC v. Maxim Power Corp., 196 F.Supp.3d 181 (D. Mass. 2016). Defs.’Notice of Suppl. Auth. (ECF No. 87). On July 29, 2016, FERC filed its brief in response. FERC’s Opp’n to Resp’ts’ Br. Concerning Disc. (ECF No. 88) (FERC’s Disc. Resp.). The Respondents replied on August 8, 2016. Defs.’ Reply Br. Concerning Disc. (ECF No. 89) (Resp’ts’ Disc. Reply). On August 17, 2016, the Respondents filed a second, supplemental brief to alert' the Court to another recently-decided case, FERC v. City Power Marketing, LLC, 199 F.Supp.3d 218 (D.D.C. 2016). Defs.’Second Notice of Suppl. Auth. (ECF No. 90), FERC responded to the Respondents’ notices of supplemental authority on August 29, 2016. FERC’s Resp. to Resp’ts’ Notices of Suppl. Auth. (ECF No. 93) (FERC’s Resp. to Suppl. Auth.).

B. The Parties and Relevant Entities

FERC is an administrative agency of the United States, organized and existing pursuant to the FPA, 16 U.S.C. § 791a et seq. FERC Pet. -¶ 13. FERC’s Office of Enforcement (Enforcement) “initiates and executes investigations of possible violations of the Commission’s rules, orders, and regulations relating to energy market structures, activities, and participants. Office of Enforcement (OE), FERC, https:// www.ferc.gov/aboui/offices/oe.asp (last visited January 25, 2017). Based on its investigations, Enforcement may submit reports to the Commission recommending that the Commission institute administrative proceedings. FERC’s Disc. Resp. at 4. Once the Commission authorizes an administrative proceeding, Enforcement’s role shifts from investigator to litigator, and a “wall” goes up between the Commission and its Enforcement arm to prevent ex parte communication. Id.

ISO-NE is an independent, non-profit organization that works to ensure the day-to-day reliable operation of New England’s bulk electric energy generation and transmission system by overseeing the fair administration of the region’s wholesale energy markets. FERC Pet. ¶ 2. FERC regulates the markets that ISO-NE administers. Id.

Respondent Competitive Energy Services (CES) is a limited liability company organized under the laws of Maine with its principal place of business in Portland, Maine. Id. ¶ 15. It provides energy consulting and other services to clients throughout North America. Id. ¶35. Respondent Richard Silkman resides in Maine and is an employee and managing member of CES. Id. ¶ 14.

C. Alleged Facts

1. The Day-Ahead Load Response Program

According to FERC, ISO-NE administers “load response programs” that encourage large electricity users to reduce the amount of electricity they consume from the grid during periods of high or peak demand. FERC Pet. ¶ 3. This reduction in consumption helps ease stress on the electric grid and can also help lower electricity prices. Id. The specific load response program at issue here is ISO-NE’s Day-Ahead Load Response Program (the DALRP). Id. ¶ 4. Under this program, a participant could offer to reduce its electricity consumption by a certain amount during the peak hours the following day in exchange for payment from ISO-NE. Id. If ISO-NE accepted a participant’s offer, and if the participant actually reduced its consumption the following day, then the participant would receive compensation based on the amount of electricity they conserved. Id. ¶ 4.

In order to calculate how much a participant actually reduced its electricity consumption, ISO-NE first needed to establish a baseline to reflect the amount of electricity the participant normally demanded from the grid. Id ¶ 29. To do so, ISO-NE calculated the participant’s average electricity demand between 7:00 AM and 6:00 PM over a five-day period before the participant agreed to reduce its electricity consumption. Id. ¶¶ 29-30, Once ISO-NE calculated the baseline, it was able to determine the participant’s reduced demand by subtracting the actual electrical consumption from the grid during the hours in which ISO-NE accepted the participant’s offer. Id. ¶ 29.

After establishing the participant’s initial baseline, ISO-NE continued to adjust the baseline on a rolling basis in order to reflect changes in a participant’s normal operations over time. Id. ¶ 30. However, ISO-NE could not adjust the baseline on days when it accepted a participant’s offer to reduce, consumption because the participant’s consumption on those days would not reflect its normal operations. Id. ¶ 31. Consequently, if ISO-NE accepted a participant’s offer every day, the participant could maintain its initial baseline indefinitely. Id.

2. Silkman and CES’s Alleged Fraud

In its Petition, FERC makes the following allegations regarding CES’s and Dr. Silkman’s supposed involvement in a scheme to defraud ISO-NE. According to FERC, CES and its managing member, Dr. Silkman, regularly provided energy consulting services to Rumford Paper Company (Rumford), a paper mill in Rum-ford, Maine. Id. ¶ 36. As a result, CES and Dr. Silkman knew that, although Rumford was connected to the electrical grid, it typically used a large, relatively inexpensive on-site generator to meet the substantial majority of its electricity needs to operate the paper mill. Id. In the spring of 2007, Dr. Silkman approached Rumford and suggested that the paper mill enroll in the DALRP. Id. ¶ 37.

Rumford enrolled in the DALRP with assistance from an Enrolling Participant, Constellation NewEnergy, Inc. (Constellation). Id. ¶ 46. An Enrolling Participant is a third-party that helps register participants in the DALRP and arranges for ISO-NE to receive load response and meter data from the participant. Id. Additionally, an Enrolling Participant serves as a middleman, receiving payments from ISO-NE and distributing the revenue to the participant. Id.

Dr. Silkman and another CES partner advised Rumford to reduce the amount of electricity the mill created with its generator during the initial five-day baseline calculation period and purchase unusually large amounts of more expensive replacement electricity from the grid. Id. ¶ 42. Dr. Silkman understood that this otherwise uneconomic short-term purchase of grid electricity would artificially inflate Rum-ford’s baseline. Id. Dr. Silkman also understood that by designing daily offers to ISO-NE that were almost guaranteed to be accepted, Rumford could maintain its inflated baseline indefinitely. Id. ¶ 44. Dr. Silkman told Rumford personnel that if those bids were accepted, Rumford would receive substantial payments under the DALRP by simply resuming routine operation of its generator without reducing its electricity consumption from the grid. Id.

Although Rumford managers expressed concern about the scheme to Dr. Silkman and CES, noting that it appeared that they would be paid for doing nothing, Rumford nevertheless authorized CES to register Rumford in the DALRP and facilitate the scheme. Id. ¶ 45. CES, including Dr. Silk-man, then communicated daily with ISO-NE regarding Rumford’s availability to provide approximately 20 MW of electricity reduction. Id. This phantom reduction was roughly equal to the amount by which Rumford curtailed its electricity generation during the baseline period. Id. CES continued the scheme by making offers at a price that effectively guaranteed acceptance, thereby assuring that Rumford’s baseline would remain unchanged. Id.

The scheme continued from late July 2007 through early February 2008. Id. ¶ 47. During this time, Rumford did not actually reduce electricity consumption below its normal levels. Id. Dr. Silkman and CES actively participated in the scheme and continually concealed Rumford’s lack of demand reduction from ISO-NE and from Constellation, Rumford’s Enrolling Participant. Id.

In January 2008, ISO-NE made a presentation notifying market participants that ISO-NE expected to make changes to the program because it had learned that some market participants had wrongly attempted to profit from intentionally establishing and then maintaining an inflated baseline. Id. ¶ 48. The presentation clearly described the scheme that Dr. Silkman and CES designed and executed in conjunction with Rumford. Id. Dr. Silkman was aware of the presentation and forwarded it to Rumford managers, but neither he nor anyone else at CES recommended that Rumford cease its involvement in the scheme. Id.

Also in January 2008, Dr. Silkman received a phone call and a letter from Constellation explaining its concern that certain program participants had artificially increased their electricity usage during their baseline periods and warned that an enrollee could be subject to sanctions if ISO-NE determined that the enrollee committed fraud to extract load response program payments. Id. ¶ 49. Despite these communications, Dr. Silkman, CES, and Rumford continued their involvement with the scheme. Id.

During Rumford’s participation in the DLARP, ISO-NE paid $3,336,964.48 for load response that it contends did not occur. Id. ¶ 51. Rumford, Constellation, and CES shared the ISO-NE payments. CES—and Dr. Silkman as a result of his employment and ownership—received $166,841.13, or five percent of the total payments. Id.

3. Enforcement’s Investigation of Dr. Silkman and CES

On February 8, 2008, ISO-NE altered the DALRP program to guard against baseline inflation. Id. ¶ 50. After analysis of electricity usage data, ISO-NE suspected that Rumford had committed fraud and referred the behavior to FERC for possible enforcement action. Id.

Enforcement commenced an investigation of Dr. Silkman and CES in February 2008. Id. ¶ 52. During the investigation, Enforcement obtained and reviewed thousands of pages of documents, including emails, internal memoranda, and electricity consumption and load response offer data. Id. Enforcement also deposed Dr. Silkman and several third-party witnesses, including Rumford and Constellation employees. Id. Enforcement determined from its investigation that Dr. Silkman and CES devised and implemented a scheme to inflate Rumford’s DALRP baseline in violation of section 222 of the FPA and the Commission’s Anti-Manipulation Rule. Id. ¶ 53.

Enforcement was unable to reach a settlement with either Dr. Silkman or CES and therefore issued letters notifying them of Enforcement’s intent to seek action by the Commission. Id. ¶ 54. Dr. Silkman and CES submitted a joint 83-page response to these letters. Id. Enforcement provided this response to the Commission, along with a report detailing Enforcement’s findings, and recommended that the Commission issue orders to show cause to CES and Dr. Silkman. Id.

4. FERC Issues Orders to Show Cause

On July 17, 2012, the Commission unanimously agreed to issue the orders to show cause to Dr. Silkman and CES. Id. ¶ 55. The orders required Dr. Silkman and CES to show cause why the Commission should not: (1) find them in violation of section 222 of the FPA, 16 U.S.C. 824v, and the Commission’s Anti-Manipulation Rule; (2) assess a $1,250,000 civil penalty against Dr. Silkman; (3) assess a $7,500,000 civil penalty against CES; and (4) require CES to disgorge $166,841.13 in unjust profits. Id. ¶ 55.

The orders also explained that Dr. Silk-man and CES were required to elect either an administrative hearing before an ALJ pursuant to 16 U.S.C. § 823b(d)(2) or an immediate ruling by the Commission under 16 U.S.C. § 823b(d)(3). Id. ¶ 56. As FERC explained to Dr. Silkman and CES in the orders to show cause:

If Respondent elects an administrative hearing before an ALJ, the Commission will issue a hearing order; if Respondent elects an immediate penalty assessment, and if the Commission finds a violation, the Commission will issue an order assessing a penalty. If such penalty is not paid within 60 days of assessment, the Commission will commence an action in a United States district court for an order affirming the penalty, in which the district court may review the assessment of the civil penalty de novo.

FERC Pet., Attach. 5, Order to Show Cause and Notice of Proposed Penalty at 3-4 (ECF No. 1); FERC Pet., Attach. 6, Order to Show Cause and Notice of Proposed Penalty at 3-4 (ECF No. 1). On July 27, 2012, CES and Dr. Silkman requested an immediate penalty assessment by the Commission under § 823b(d)(3). FERC Pet. ¶ 56.

On September 14, 2012, Dr. Silkman and CES submitted a joint answer to the orders to show cause. Id. ¶ 58. On November 13, 2012, Enforcement filed a reply. Id.

5. FERC Assesses Civil Penalties

On August 29, 2013, after reviewing the briefs and the evidence that Enforcement provided, the Commission issued orders assessing civil penalties against CES and Dr. Silkman. Id. ¶60. The Commission unanimously found:

1) Dr. Silkman and CES violated FPA section 222 and the Commission’s Anti-Manipulation Rule from July 2007 to February 2008 by engaging in a scheme to inflate and then maintain a fraudulent baseline in order to receive payments for load response that they never intended to provide or actually provided. Id. ¶¶ 60, 66-69.

2) Dr. Silkman and CES acted with scienter in executing their manipulative scheme. Dr. Silkman and CES acknowledged that Dr. Silkman, as an employee of CES, intentionally proposed to Rumford that the mill reduce on-site generation of electricity during the baseline period and then later submit daily offers to reduce load to ISO-NE. Id. ¶¶ 71-73.

3) The Commission had enforcement jurisdiction over both CES and Dr. Silkman for their involvement with the scheme. Id. ¶¶ 74-76.

The Commission issued assessment orders in accordance with Enforcement’s recommendations. Id. ¶ 62. Dr. Silkman and CES both failed to pay their penalties within sixty days; therefore, pursuant to § 823b(d)(3)(B), the Commission filed a petition with this Court for an order affirming the assessment of the civil penalties. Id. ¶ 12.

II. PARTIES’ POSITIONS

The question before the Court is what procedures should govern the Court’s de novo review of the Commission’s assessment orders. As the procedural history of this case demonstrates, the parties have thoroughly briefed and argued their positions. In general, the Respondents argue that the FPA requires this Court to treat the matter as an ordinary civil action governed by the Federal Rules of Civil Procedure. As such, the Respondents assert that they are entitled to discovery, including information relating to FERC’s investigation. Further, the Respondents contend that the Court must hold a trial if factual disputes persist following discovery.

By contrast, FERC insists that this is not a normal civil action and that the text of the FPA does not compel the Court to grant discovery or hold a trial. Instead, FERC contends that the statute grants the Court broad discretion to design appropriate procedures in its review of the Commission’s assessment orders. FERC believes that in order for the Court to determine the scope of its review, the Court should first examine the assessment orders themselves. Once the Court examines the orders, the Court may decide that it is able to immediately rule on the Commission’s orders, or the Court may wish to supplement its review with documents from the administrative record, which FERC defines as “[a]ll communications with the Commission and all materials considered by the Commission in the adjudication—including submissions by Enforcement and Respondents and the documents relied upon therein[.]” FERC’s Disc. Resp. at 4. FERC acknowledges that the statute permits the Court to order discovery and a trial but argues that, given the extensive adversarial proceedings at the agency level in this case, the Court’s review should “begin ... and end ... with the Assessment Orders, supplemented as necessary by the administrative record!.]” Joint Rep. at 4. FERC predicts that “no discovery will prove necessary and, if discovery is required, it should be minimal and directed to specific issues.” Id,

A. Respondents’ Positions

1. The Federal Rules of Civil Procedure Govern the Court’s De Novo Review of the Assessment Orders

The FPA states that in reviewing the Commission’s assessment orders, the district court “shall have the authority to review de novo .the law and the facts involved.” 16 U.S.C. § 823b(d)(3)(A). The Respondents characterize this de novo review as an ordinary civil action that requires the application of the Federal Rules of Civil Procedure—including rules concerning discovery—and the Federal Rules of Evidence. Resp’ts’ Suppl. Br. at 6. The Respondents note that Federal Rule of Civil Procedure 81 identifies certain instances in which the Federal Rules do not apply to civil actions and that penalty enforcement actions under the FPA are not among the list of exceptions. Id. More generally, the Respondents assert that if “ ‘de novo’ review is to be given any meaning, both sides should be permitted to develop the evidence through' the usual tools of discovery, and both sides should be permitted to participate in a trial to determine the facts.” Id.

To underscore their argument, the Respondents contrast the FPA’s two procedural options. Id. at 8-9. Under the first option (Option 1), the targets of FERC investigations are entitled to a hearing in front of an ALJ and may appeal any unsatisfactory decision to the Commission and, eventually, to the United States Court of Appeals in accordance with the APA. Id. at 8 (citing 16 U.S.C. § 823b(d)(2)(A)). Under the second option (Option 2), the Commission “promptly” issues a penalty and may seek de novo review of the law and the facts in a district court to enforce the penalty assessment. Id. at 8-9 (citing 16 U.S.C. § 823b(d)(3)(B)).

The Respondents argue that if de novo review, under Option 2 did hot include discovery and, if necessary, a trial,' then it would not provide a meaningful alternative to Option 1. Id. at 9-10. Option 1 entitles the targets- of FERC investigations to full discovery, a hearing, review by the Commission, and judicial review by a United States Court of Appeals'. Without discovery and the possibility of a trial, then the district court’s review in Option 2 would accomplish nothing more than the Court of Appeals’ review in Option 1, yet the target of the investigation would not have the concomitant benefit of discovery or a hearing. According to the ’ Respondents, “[i]t strains credulity to claim, as FERC 'has, that [Respondents] are entitled to discovery and due process only if they choose ‘an administrative proceeding over -a district court proceeding.” Resp’ts’ Mot. at 3-4.

Relatedly, the Respondents argue that the Court should not limit its de ' novo review to the administrative record, as FERC suggests, because ho proper administrative record exists in this case. Resp’ts’ Suppl. Br. at 7. The Respondents claim that because they selected Option 2, there was no administrative proceeding in front of an ALJ, and thus no administrative record. Id. The Respondents .insist that what the Commission refers to.as an “ac[-ministrative record” is actually a subset of documents that Enforcement “cherry-picked” from among “thousands of pages” of investigative materials and provided to the Commission to serve as the basis of the Commission’s assessment orders. Resp’ts’Disc. Br. at 4.

The Respondents assert that they do not have access to the majority of evidence that FERC collected in the . course of its investigation. Resp’ts’ Suppl- Br.. at 7. This alone, the Respondents contend, warrants additional discovery to supplement the record in this case. Id. -(citing Dopico v. Goldschmidt, 687 F.2d 644, 654 (2nd Cir. 1982) (permitting discovery where the administrative record lacked documents that formed the basis for the agency’s decision)). For instance, the Respondents allege that FERC deposed numerous entities and individuals and collected information through both formal data requests and informal channels. Joint Rep. at 5-6. According to the Respondents, FERC barred the Respondents from attending the depositions and forbade them from reviewing the deposition transcripts. Id. at 6. Further, the Respondents state that, despite repeated requests, FERC refused to share the information it collected with the Respondents unless FERC deemed the information exculpatory. Id.

To underscore their lack of access to FERC’s investigatory materials, the Respondents point out that FERC’s initial disclosures in this litigation revealed a list of individuals with “relevant knowledge”; however, the Respondents allege that they do not even recognize some of the listed names. Resp’ts’ Disc. Br. at 8. As further proof, the Respondents provide a series of Bates numbers that the Respondents assert correspond to documents that formed part of FERC’s investigation but were never produced to the Commission or the Respondents. Id. at 4-5. Apart from these documents, the Respondents continue to “believe that FERC conducted depositions that have not been identified to [the Respondents].” Id. at 5.

The Respondents maintain that “[sjince discovery was unavailable, or one-sided, in the investigation in this case, the weight of authority ... supports discovery and the introduction of new evidence in de novo proceedings.” Resp’ts’ Suppl. Br. at 11 (quoting Saunders v. United States, 507 F.2d 33, 36 (6th Cir. 1974) (“Since the procedures followed at the administrative level do not provide for discovery or testing of .evidence of [an agency] by cross-examination, it is particularly important that an aggrieved person who seeks judicial review in a trial de novo not be deprived of these traditional tools ... ”); Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1, 23, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974); Broad St. Mkt., Inc. v. United States, 720 F.2d 217, 220 (1st Cir. 1983)).

The Respondents point out that “FERC’s position of summary review of the existing ‘record’ ” is contrary to FERC’s approach in Federal Energy Regulatory Commission v. MacDonald, 862 F.Supp. 667 (D.N.H. 1994), another case interpreting “review de novo” in the context of the FPA. Resp’ts’ Suppl. Br. at 10. Accoi'ding to the Respondents, “FERC appropriately filed a complaint against a defendant in the MacDonald case, rather than a petition against respondents in this case, and in MacDonald, the parties engaged in discovery, including depositions.” Id. at 10-11 (emphasis in original). The Respondents surmise that “FERC’s change in position is due to its attempt to avoid the otherwise dispositive statute of limitations defense available if this case is treated as a civil action subject to the general five-year statute of limitations.” Id. at 11.

Furthermore, the Respondents highlight that FERC itself previously recognized that § 823b(d)(3) provides for a de novo “trial.” Id. at 10 (citing Procedures for the Assessment of Civil Penalties Under Section 31 of the Federal Power Act, 53 Fed. Reg. 32,035, 32,039 (Aug. 23, 1988) (noting that “the assessment of civil penalties by the Commission” under Option 2 “merely triggers the process leading to a de novo trial”)). Moreover, the Respondents point out that, even in the present case, FERC agrees that the Court has discretion to order a full trial. Resp’ts’ Disc. Br. at 1. Similarly, Judge Woodlock confirmed in his order on the Respondents’ motion to dismiss that “de novo review may allow for the evaluation of evidence that was not a part of the agency administrative record and may or may not require other trial-like proceedings.” Id. at 2 (quoting Silkman, 2016 U.S. Dist. LEXIS 48409, at *26).

Finally, the Respondents identify two recent cases that discuss, for the first time, the procedures applicable to a district court’s review of FERC’s assessment of civil penalties under the FPA. Notice of Suppl. Auth. at 1 (citing Maxim Power, 196 F.Supp.3d 181); Second Notice of Suppl. Auth. at 1 (citing City Power, 199 F.Supp.3d 218). According to the Respondents, these cases hold that a district court performing a review de novo of FERC’s penalty assessments must treat the matter as an ordinary civil action subject to the Federal Rules of Civil Procedure.

2. Due Process Requires the Court to Apply the Federal Rules of Civil Procedure to the Court’s De Novo Review

The Respondents argue that FERC’s preferred procedural approach—namely, to limit the Court’s de novo review to the assessment orders and the administrative record—would deprive the Respondents of due process. Resp’ts’ Suppl. Br. at 13. The Respondents argue that notions of fundamental fairness compel the Court to grant the Respondents discovery and, if necessary, a trial in accordance with the Federal Rules of Civil Procedure. Id. at 13-17.

The Respondents submit that “[t]he fundamental requirement of due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’ ” Id. at 13 (citing Mathews v. Eldridge, 424 U.S. 319, 322, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976)). They explain that Mathews articulated a three-factor test to determine what process is due. Id. Applying the Mathews test, the Respondents conclude that FERC’s preferred approach would not provide adequate process. Id.

The first factor concerns the private interests at stake. Id. at 13. The Respondents insist that the stakes are “enormous since FERC is attempting to assess millions in penalties that would bankrupt both Dr. Silkman and CES.” Id. The second factor relates to the risk of error given the established procedures. Id. The Respondents argue that the risk of error is high because “FERC engaged in a one-sided investigation, and it has denied Respondents the opportunity to engage in even limited discovery or to review the entire record.” Id. The final factor deals with the governmental interest in maintaining the established procedures. Id. at 14. The Respondents argue that “FERC has not asserted any government interest in prohibiting Respondents from taking discovery, confronting the evidence and witnesses against them, and presenting evidence in a district court hearing, much less one that could override Respondents’ rights to due process.” Id.

Additionally, the Respondents claim that “[c]ourts time and again have noted that limitations on discovery implicate the fundamental fairness of the adjudicative process” Id. at 15 (citing McClelland v. Andrus, 606 F.2d 1278, 1286 (D.C. Cir. 1979) (“[Discovery must be granted if in the particular situation a refusal to do so would prejudice a party as to deny him due process”)). Likewise, the Respondents contend that it is “elementary that due process within administrative procedures requires the opportunity to be heard at a meaningful time and in a meaningful manner.” Id. (quoting Raper v. Lucey, 488 F.2d 748 (1st Cir. 1973) (internal quotation marks omitted)). “[D]ue process demands more than simply an opportunity to offer one’s side of the story[.]” Resp’ts’ Mot. at 8 (citing King v. Higgins, 370 F.Supp. 1023, 1028 (D. Mass. 1974) (“The opportunities to present evidence and to confront adverse witnesses are safeguards to even the most conservative view of fundamental fairness”)). Rather, “courts have stated that an opportunity to be heard requires that an individual be afforded some kind of hearing.” Id. (quoting Gorman v. Univ. of Rhode Island, 837 F.2d 7, 13 (1st Cir. 1988)). The Respondents claim, however, that’'FERC’s preferred procedure would deprive them of this “opportunity to be heard demanded by the due process.” Resp’ts’ Suppl. Br. at 15.

The Respondents seek discovery and a trial in the district court in part because they perceive the Commission’s procedures at the agency level to be fundamentally unfair. Id. at 15-17. For instance, the Respondents argue that agency rules permit 'Enforcement to speak directly to the Commissioners responsible for assessing the penalties up until the Commission issue orders'to show cause. Id. at 15. According to the Respondents, this meant that Enforcement and the Commission were able to communicate and work together for more than two and a half years in this case. Id. Moreover,, the Respondents question the impartiality of the “captive ALJs” employed by FERC. Resp’ts’ Mot. at 2. They indicate that “[i]n every civil penalty proceeding that a FERC ALJ hap decided, since 2005, save one, the ALJ that FERC has assigned has agreed with the Commissioners and imposed the Commission’s proposed penalties.” Id. at 3. The Respondents assert that this procedural unfairness drove their decision to bypass a hearing with an ALJ under Option 1 and pin their hopes instead on de novo review at the district court under Option 2. Id. at 3?6. ,

. 3. The Respondents’ Discovery Requests

The Respondents seek the following discovery in this case:

1) • Data and information underlying FERC’s claims and theories in this matter;

2) Any discovery conducted and information gathered by FERC in the underlying investigations as well as in related investigations that led to the initiation of separate actions against the Respondents;

3) Information relating to FERC’s investigative process, including communications between or among FERC Commissioners or Enforcement relating to the investigatory proceedings;

4) FERC’s communications with ISO-NE and Constellation relating to the Respondents or the DALRP; and

5) . Any information relating to any expressed confusion or request for clarification relating to the DALRP.

Joint Rep. at 8-9. In addition, the Respondents anticipate deposing and issuing document subpoenas to ISO-NE, Constellation, Rumford Paper Company, and possibly other third parties. Id. at 9.

4. Complex Track

The Respondents further request that the Court assign the case to the complex track pursuant to Local Rule 16.1(c). Resp’ts’ Mot. at 1. The Respondents assert that the case is appropriate for the complex track given the complexity of the DALRP, the number of potential witnesses, and the amount of data and other documents. Id. at 9-10.

B. FERC’s Positions

1. The Court Does Not Need to Order Discovery or a Trial to Review De Novo the Assessment Orders

a. The FPA’s Statutory Language

FERC argues that the language of the FPA does not require the Court to order discovery or hold a trial as part of its review of the Commission’s assessment orders. Joint Rep. at 5. FERC points out that § 823b(d)(3)(B) states that the Court “shall have authority to review de novo” the Commission’s assessment orders. FERC’s Suppl Resp. at 21. According to FERC, “authority” is “[o]ften synonymous with power.” Id. at 22 (quoting Black’s Law Dictionary 329 (5th ed. 1979)). “Congress’ decision to grant the Court the ‘authority’ to review the Assessment Orders therefore means that the Court has the power to conduct a review, but it does not mean that it must perform any particular type of review.” Id. at 22 (citing Pacific Lighting Serv. Co. v. FPC, 518 F.2d 718, 720 (9th Cir. 1975)). Rather, the Court has “great latitude in determining how to conduct its review of the underlying Commission Assessment Order.” Joint Rep. at 5.

FERC contends that the Respondents’ argument that the Federal Rules of Civil Procedure must apply ignores the words “shall have the authority,” thereby violating the rule of statutory interpretation that “every word in a statute is to be given meaning whenever possible.” FERC’s Suppl. Resp. at 22 (citing U.S. v. Ven-Fuel, Inc., 758 F.2d 741, 751-52 (1st Cir. 1985)). FERC states that “(h]ad Congress intended to require a trial, it could have done so simply by saying ... that the court ‘shall’ conduct a ‘trial.’ ” Id. at 24. Indeed, FERC points out, Congress explicitly provides for a “trial de novo when a district court reviews civil penalties relating to employee health benefit plans.” Id. at 24 (citing 42 U.S.C. § 300e-9(d)(3)). Thus, according to FERC, the plain language of the FPA indicates that the Court does not need to order discovery or hold a trial to review the Commission’s assessment orders.

b. Nature of “Review De Novo”

FERC characterizes the Court’s task as a “judicial review of administrative orders issued by the Commission^]” Joint Rep. at 3. This, in FERC’s view, does not require discovery or a trial. FERC’s Suppl. Resp. at 9. In support of this characterization, FERC points to the text of the FPA, caselaw, and Judge Woodlock’s earlier statements in this case. First, FERC highlights that in § 823b(d)(3)(B), Congress directed the Commission to file an action seeking to “affirm” the penalties it levied. Id. at 25. FERC contends that “[t]he result of a ‘trial’ is not an affirmation, the result of a ‘review’ often is.” Id. at 25.

Second, FERC cites Doe v. United States, 821 F.2d 694 (D.C. Cir. 1987), which stated that “de novo review, in diverse contexts, does not necessarily require any trial-type hearing ...” FERC’s Resp. to Suppl, Auth. at 2 n.2 (citing Doe, 821 F.2d at 697-98 n.10). Finally, FERC relies on a passage in Judge Woodlock’s order on the Respondents’ motion to dismiss. According to FERC, Judge Wood-lock determined that the Commission “conducted an adjudication” and that this Court’s task was to “review” the agency action resulting from that adjudication: “Although this court’s de novo review may gain some procedural richness in the context of an action seeking enforcement of an administrative order, that potential does not change the fundamental nature of this court’s task—which is to ‘review’ agency action ...” Id. at 1 (citing Silkman, 2016 U.S. Dist. LEXIS 48409 at *26). In FERC’s view, Judge Woodlock’s pronouncement indicates that the Respondents are not entitled to a trial:

It is law of this case that the Commission conducted an adjudication subject to judicial review. The Court should focus instead on the question left open by Judge Woodlock’s ruling: how the Court will perform its review[.]

Id. at 2.

FERC acknowledges that the FPA permits the Court to order discovery and hold a full trial. Joint Rep. at 4-5. However, given the lengthy proceedings at the administrative level in this case, FERC believes that the Court’s de novo review should begin and end with the Commission’s assessment orders themselves, “supplemented as necessary by the administrative record compiled in the Commission’s assessment proceedings.” Id. at 4. This approach, FERC contends, is consistent with the application of de novo review in other contexts. FERC’s Disc. Resp. at 9 n. 34. According to FERC, “[t]his standard of review has been most commonly applied in Employee Retirement Income Security Act (ERISA) cases, where well-developed case law makes clear that a reviewing court should rarely look beyond the administrative record.” Id. FERC thus encourages the Court to adopt the ERISA framework and look no further than the administrative record to affirm the Commission’s assessment orders. FERC’s Disc. Resp. at 9-10.

Finally, FERC acknowledges its previous statement that when “district court procedures are followed, the assessment of civil penalties by the Commission merely triggers the process leading to a de novo trial.” FERC’s Suppl. Resp. at 32 (quoting Procedures for the Assessment of Civil Penalties Under Section 31 of the Federal Power Act, 53 Fed. Reg. 32, 035, 32, 039 (Aug. 23, 1988)). However, FERC insists that the Respondents place “far more weight on [the Commission’s prior statements] than is proper.” Id. FERC points out that the Commission made the statement in 1988, and that since then, the Commission has amended its procedures and has made other, more recent statements referring to de novo review, not de novo trial. Id. at 33.

2. Due Process Does Not Require the Court to Apply the Federal Rules of Civil Procedure

FERC maintains that the Commission’s enforcement process gave the Respondents a full and fair opportunity to present exculpatory evidence and argument in support of their positions, and therefore the Court does not need to order further discovery and hold a trial to protect the Respondents’ due process rights. Id. at 34. FERC alleges that Enforcement solicited evidence and argument from the Respondents on two occasions and that the Respondents availed themselves of both opportunities. Id. However, FERC asserts that the Respondents were • “unable to make a convincing case in the face of strong evidence against them” even though the evidence demonstrating the Respondents’ fraud “came from them own data, their own files, their own conduct, and the mouths of them own employees.” Id. at 35-36.

FERC also contends that the Respondents “are wrong when they claim that they were not given the opportunity for written or oral discovery, hearing, or cross examination of witnesses.” Id. at 38 (emphasis omitted). FERC explains that if the Respondents selected Option 1—that is, a hearing in front of an ALJ—then they would have had full access to discovery and the ability to present and cross-examine witnesses. Id. at 30. However, the Respondents opted to have the Commission directly assess the penalty. Id. at 38. Thus, according to FERC, the Respondents had an opportunity for a hearing, but “they chose not to exercise” it. Id.

FERC also distinguishes the Respondents’ due process cases. Id. at 36-38. For instance, FERC argues that McClelland acknowledges that “the extent of permissible discovery in an agency proceeding ‘is primarily determined by the particular agency.’ ” Id, at 36 (citing McClelland, 606 F.2d at 1286). Additionally, FERC argues that the three-factor test from Mathews is inapposite because the Respondents had the opportunity “to present evidence, witnesses, and arguments” by choosing Option 1. Id. at 37. Also, FERC contends that Mathews’ “most important teaching is that a due process analysis in the administrative realm requires pragmatic balancing and granting substantial latitude to agencies to fashion procedures to resolve disputes.” Id. (citing Mathews, 424 U.S. at 348-49, 96 S.Ct. 893).

Finally, FERC addresses the Respondents’ concerns about ex parte communication between the Commission and FERC leading up to the orders to show cause. Id. at 34 n. 41. FERC insists that such contact is permissible, id. at 34 n. 41 (citing Withrow v. Larkin, 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975)), and that the Commission is an unbiased adjudicator. FERC’s Disc. Resp. at 2. FERC maintains that no contact took place after the Commission issued the orders to show cause, and that Commission regulations require the erection of an ethical wall during the remainder of the adversarial provisions. FERC’s Suppl. Resp. at 34 n. 41.

3. The Court Should Not Order Discovery or Grant Access to FERC’s Investigative Files

Although FERC acknowledges that the FPA grants reviewing courts the authority to order discovery, FERC asserts a number of reasons why discovery is not appropriate here. First, FERC argues that the Respondents waived their rights to discovery in this case. Second, FERC contends that the Respondents have not shown that discovery is required. Finally, FERC argues that the Respondents seek to discover confidential information.

a. Respondents Waived Requests for Investigative Materials or Discovery

First, FERC asserts that the Respondents in this case waived their rights to additional documents or testimony because they failed to request these materials in front of the Commission. FERC’s Disc. Resp. at 4. FERC argues that “[ojrderly procedure and good administration require that objections to the proceedings of an administrative agency be made while it has opportunity for correction in order to raise issues renewable by the courts[.]” Id. at 5 (quoting U.S. v. LA Tucker Truck Lines, 344 U.S. 33, 36-37, 73 S.Ct. 67, 97 L.Ed. 54 (1952)). FERC asserts the Respondents did not notify the Commission of the need for additional facts for their defense or for specific documents or testimony. Id. at 5-6. Thus, FERC believes that the Respondents have waived any right to these materials. FERC argues that its position accords with Judge Wood-lock’s earlier statement regarding waiver: “the fundamental nature of this court’s task ... is to ‘review’ agency action[.] ... [This] does not alter the basic rule that an argument may be waived by the failure to raise it at an appropriate time—such as at the time required by the agency’s rules.” Id. at 5 n. 18 (quoting Silkman, 2016 U.S. Dist. LEXIS 48409 at *26).

Additionally, FERC argues that the Respondents waived any right to discovery by electing to forgo a formal hearing in front of an ALJ. Id. at 6. FERC points out that the Respondents bypassed a hearing in favor of prompt Commission adjudication. Id. Because the Respondents chose to forgo a hearing at the agency level, and because they failed to request specific documents or testimony before the Commission, FERC contends that the Respondents “waived any argument that additional facts are needed to adjudicate this matter.” Id. at 7.

b. Respondents Have Not Shown that Discovery is Needed

Next, FERC argues that the Respondents have not shown that they require discovery. Id. at 7-8. First, FERC argues that the Respondents actually possess a number of documents they claim the Commission has withheld. Id. at 7. Second, FERC alleges that the Respondents have not satisfactorily explained why they need additional testimony or what additional information they seek. Id. Third, FERC contends that the Respondents have failed to adequately identify specific documents that the Commission supposedly withheld. Id. at 8. Although the Respondents listed a series of Bates numbers, FERC argues that the Respondents do not show why these particular documents are relevant. Id. Finally, FERC asserts that the Respondents cannot obtain discovery of internal communications between Enforcement and the Commission during the investigation because such communications are “protected by the deliberative process, attorney work product, and attorney-client communication privileges.” Id.

c. Investigative Files Are Confidential

FERC insists that the Respondents are not entitled to Enforcement’s investigative materials because “Enforcement’s investigations are confidential by law ... to protect the integrity of the investigative process.” Id. at 3 (citing 18 C.F.R. § lb.9). FERC explains that in 2009, the Commission adopted a policy that requires Enforcement to “scrutinize materials it receives from sources other than the investigative subject(s) for materials that would be required to be disclosed under Brady.” Id. at 3 n. 11. Under the policy, “[a]ny such materials or other information that are not known to be in the subject’s possession shall be provided to the subject.” Id. FERC states that it “long ago produced all documents obtained from any source that were arguably exculpatory pursuant to Commission policy.” Id. This, FERC asserts, satisfies its obligations to produce documents from Enforcement’s investigative file. Id, at 3-4.

4. Complex Track

FERC argues that even if the Court orders a trial in this case, the Court should not assign it to the complex track for three reasons. FERC’s Resp. at 7. First, the case does not involve a large number of parties. Id. Second, the Respondents’ alleged fraud does not involve complex issues. Id. Finally, the scope of discovery would be limited because the Commission has already collected the relevant evidence, and any discovery would be supplemental. Id,

III. DISCUSSION

A. Required Procedures under the FPA

The Court must determine what procedures govern its de novo review of the Commission’s assessment orders under the FPA. The Court first analyzes the text of the statute and the Commission’s past interpretations and practices in relation to the FPA.

1. Statutory Language

Before FERC may issue “an order assessing a civil penalty against any person,” the FPA requires the Commission to “inform such person of his opportunity to elect” one of two procedural routes. 16 U.S.C. § 823b(d)(l). The default option (Option 1) is set forth in 16 U.S.C. § 823b(d)(2). Under Option 1:

[The Commission] shall assess the penalty, by order, after a determination of violation has been made on the record after an opportunity for an agency hearing ... before an administrative law judge ... Such assessment order shall include the administrative law judge’s findings and the basis for such assessment. Any person against whom a penalty is assessed under this paragraph may ... institute an action in the United States court of appeals for the appropriate judicial circuit for judicial review of such order ,.. The court shall have jurisdiction to enter a judgment affirming, modifying, or setting aside in whole or in [p]art, the order of [the Commission], or the court may remand the proceeding to [the Commission] for such further action as the court may direct.

16 U.S.C. § 823b(d)(2)(A)-(B).

In this case, the Respondents chose to proceed under 16 U.S.C. § 823b(d)(3) (Option 2), Under Option 2:

[The Commission] shall promptly assess such penalty, by order[.] ... If the civil penalty has not been paid within 60 calendar days ... [the Commission] shah institute an action in the appropriate district court of the United States for an order affirming the assessment of the civil penalty. The court shall have authority to review de novo the law and the facts involved, and shall have jurisdiction to enter a judgment enforcing, modifying, and enforcing as so modified, or setting aside in whole or in [p]art such assessment.

16 U.S.C. § 823b(d)(3)(A)-(B).

As an initial matter, Option 2 does not dictate the procedures the Commission should use to assess the civil penalties. The only statutory directive is promptness. There is nothing in the language of the statute that requires the Commission to provide the targeted parties any procedural protections, such as access to discovery, a hearing, or the ability to confront evidence. Thus, the procedures that the Respondents allege governed FERC’s penalty assessment in this case—namely, inviting the Respondents to present evidence and submit written arguments, but prohibiting the Respondents from engaging in discovery—arose from FERC’s own policies, and are not derived from the express language of the statute.

Similarly, the language of Option 2 does not specify what procedures should guide the district court’s de novo review. Instead, the statute merely states, “[t]he court shall have authority to review de novo the law and the facts involved.” 16 U.S.C. § 823b(d)(3)(B). The statute does not explicitly state whether the district court should order a full trial governed— both before and during trial—by the Federal Rules of Civil Procedure, or whether the district court should fashion procedural protections unique to this process and to the circumstances of the ■ case before • it.

FERC argues that the statute’s use of the words “shall have the authority” signals that the Court has the power to conduct a review but that the Court does not need to perform any particular type of review. FERC’s Suppl. Resp. at 22. The Court disagrees with this interpretation of “authority.” The Court reads the phrase “shall have the authority” as indicating Congress’ intent to designate the district court—as opposed to the United States Court of Appeals—as the proper initial reviewing court under Option 2. At times, the United States Court of Appeals directly reviews administrative.decisions and'the process bypasses the district courts. Indeed, if the Respondents had selected Option 1 and proceeded to a hearing in front of an ALJ, they could have appealed any unsatisfactory decision to the Commission and, ultimately, to the United States Court of Appeals. In the context of. § 823b(d)(3), however, Congress specifically determined that the district court should review FERC’s order. That is, Congress authorized (“shall have the authority”) the district court to review the order. However, the Court’s interpretation still does not answer the question of what procedures should govern the Court’s review. On .that score, the statutory language remains ana-biguous. See Maxim Power, 196 F.Supp.3d at 190-91.

2. FERC’s Past Interpretations and Practices

Because the Court is unable to divine the applicable procedures from the text of the statute, the Court turns for insight to the Commission’s past interpretations and practices. In 1988, FERC issued final rules that set forth procedures for assessing civil penalties under the FPA. In connection with those rules, FERC published an order that stated that when “district court procedures are followed, the assessment of civil penalties] by the Commission merely triggers the process leading to a de novo trial.” Procedures for the Assessment of Civil Penalties Under Section 31 of the Federal Power Act, 53 Fed. Reg. 32035-01, 32038 (1988). Again in 1994, FERC stated that the FPA requires “the opportunity for a hearing on the record before an Administrative Law Judge or a trial de novo in federal court[.]” Consumers Power Co., 68 FERC 61077, 61380 (1994).

As FERC points out, however, the Commission has more recently referred to “de novo review” as opposed to a “trial de novo.” See Statement of Administrative Policy Regarding the Process for Assessing Civil Penalties, 117 FERC 61317 (2006). Significantly, FERC’s recent references to “de novo review” simply restate the statutory language and do not provide any insight into the procedures that should govern the Court’s review. Thus, these later statements do not necessarily contradict the Commission’s earlier, more specific statements indicating that the FPA requires the Court to hold a trial de novo.

Moreover, in 2007, FERC issued an order in a case involving the Natural Gas Policy Act (NGPA), another statute that FERC administers. Energy Transfer Partners, L.P., 121 FERC 61282 (2007) (NGPA Order). The NGPA contains enforcement procedures that are nearly identical to Option 2 of the FPA. That is, once the target of the enforcement receives notice of the proposed penalty, the “Commission shall, by order, assess such penalty.” 15 U.S.C. § 3414(b)(6)(E). If the target fails to pay the penalty within sixty days, “the court shall have authority to review de novo the law and the facts involved[.]” 15 U.S.C. § 3414(b)(6)(F).

FERC’s 2007 order enforcing the NGPA often refers to “de novo review.” Notably, however, the order also states that the party facing the penalty is entitled to a trial at the district court level: “Congress created an affirmative right for the [party facing a penalty] to receive review of the Commission’s assessment in a trial de novo in district court.” NPGA Order ¶ 34. Later in the order, FERC again states that “the recipient of the penalty has an affirmative right to receive review of the Commission’s assessment in a trial de novo in district court.” Id. ¶ 77. Although the NGPA and the FPA are different statutes, FERC administers both, and the NGPA’s enforcement procedures mirror the procedures available under Option 2 of the FPA.

In addition to its prior statements about the FPA, FERC’s past practices under the FPA indicate that the Commission previously accepted that Option 2 required a trial de novo. In MacDonald, 862 F.Supp. 667, a party facing a penalty assessment under the FPA chose to proceed under Option 2. FERC issued an assessment order and brought an action in district court seeking to enforce its order. Id. at 669; see Maxim Power, 196 F.Supp.3d at 192-95. Unlike the present case, the parties in MacDonald did not dispute the procedures the district court should use to review the Commission’s assessment orders. MacDonald, 862 F.Supp. at 669. Rather, the case proceeded an ordinary civil action: the Commission filed a complaint, the parties engaged in discovery, and the parties filed cross-motions for summary judgment. Id.

In ruling on the motions for summary judgment, the district court in MacDonald described its task:

[Option 2 of the FPA] specifies that when FERC brings an action in the district court to enforce a civil penalty assessment, the court must make a de novo review of the assessment. Accordingly, I will give no deference to FERC’s decision. Instead, I will make “a fresh, independent determination of ‘the matter’ at stake.”

Id. at 672. The district court denied the motions for summary judgment and set the case for trial before the parties eventually settled. It is notable