Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-11-01283/USCOURTS-caDC-11-01283-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Respondent
Moussa I. Kourouma
Petitioner

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 13, 2012 Decided July 23, 2013

No. 11-1283

MOUSSA I. KOUROUMA,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

On Petition for Review of an Order of 

the Federal Energy Regulatory Commission

Paul B. Mohler argued the cause for petitioner. With him 

on the briefs were Joseph H. Fagan, Julie D. Hutchings, and 

Stephen L. Markus. 

Robert M. Kennedy, Attorney, Federal Energy Regulatory 

Commission, argued the cause for respondent. With him on 

the brief were Tony West, Assistant Attorney General, U.S. 

Department of Justice at the time the brief was filed, Mark B. 

Stern, and Lindsey Powell, Attorneys, and Robert H. 

Solomon, Solicitor, Federal Energy Regulatory Commission.

Before: GARLAND, Chief Judge, ROGERS and GRIFFITH, 

Circuit Judges.

Opinion for the Court filed by Circuit Judge GRIFFITH.

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GRIFFITH, Circuit Judge: In a summary disposition, the 

Federal Energy Regulatory Commission (FERC) ordered 

energy trader Moussa Kourouma to pay a $50,000 civil 

penalty because he had made false statements and material 

omissions in forms he filed with the Commission and a 

market operator the Commission regulates. For the reasons set 

forth below, we deny Kourouma’s challenge to the order.

I

The Federal Power Act (FPA) grants FERC the authority 

to regulate the activity of traders who participate in energy 

markets. See 16 U.S.C. §§ 791a-825r. To ensure the integrity 

and smooth functioning of the markets, FERC has 

promulgated a range of rules, one of which is 18 C.F.R. 

§ 35.41(b), or “Market Behavior Rule 3,” which states:

A Seller must provide accurate and factual 

information and not submit false or misleading 

information, or omit material information, in any 

communication with the Commission, Commissionapproved market monitors, Commission-approved 

regional transmission organizations, Commissionapproved independent system operators, or 

jurisdictional transmission providers, unless Seller 

exercises due diligence to prevent such occurrences.

18 C.F.R. § 35.41(b). The definition of “Seller” includes “any 

person that . . . seeks authorization to engage in sales for 

resale of electric energy, capacity or ancillary services at 

market-based rates . . . .” 18 C.F.R. § 35.36(a)(1). In other 

words, energy traders like Kourouma may not make false or 

misleading submissions to the Commission or to the other 

types of entities named in the regulation.

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From January 2008 to March 2009, Kourouma worked as 

a trader in various energy markets with Energy Endeavors LP. 

When he began with Energy Endeavors, Kourouma signed an 

employment contract that contained a non-compete clause

that committed him to trade only for Energy Endeavors 

during his time at the firm and for two years after leaving the 

firm. In early 2009, Kourouma grew concerned over the 

business prospects of Energy Endeavors and formed his own 

trading firm, despite the terms of his contract. On February 

18, 2009, Kourouma incorporated Quntum Energy LLC, 

using his daughter’s name as Quntum’s registered agent in 

place of his own. In order to participate in the energy markets, 

Kourouma filed applications with FERC and a regional 

transmission organization that operates electricity trading 

markets, PJM Interconnection LLC, in March 2009. 

Kourouma did not include his name on any of the forms he 

filed with FERC or PJM. In the form filed with FERC, he 

again concealed his role in Quntum by using his daughter’s 

name in place of his own. In the form filed with PJM, he 

claimed that a friend was Quntum’s manager, which was not 

true.

Energy Endeavors soon discovered Kourouma’s activities

with Quntum; its parent company sought enforcement of his 

employment contract, see Crane Energy, Inc. v. Kourouma, 

No. 4512-VCS (Del. Ch. June 5, 2009), and protested the 

application Quntum filed with FERC. FERC conducted an 

investigation into Kourouma’s activities and issued an order 

stating that he had submitted false and misleading forms to 

FERC and PJM in violation of 18 C.F.R. § 35.41(b) and 

directing him to show cause why a $50,000 civil penalty was 

not appropriate. See Kourouma, 134 FERC ¶ 61,105 (2011).

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The order also informed Kourouma that he could choose 

between two procedural options. See 16 U.S.C. § 823b(d)(1); 

see also id. § 825o-1 (requiring FERC to follow the 16 U.S.C. 

§ 823b(d) procedures). He could elect for FERC to “promptly 

assess [the] penalty, by order,” a choice which would 

immediately vest him with appeal rights. Id. § 823b(d)(3)(A); 

see id. § 823b(d)(1), (2)(B). Or he could elect for the 

Commission to assess a penalty only “after a determination of 

violation has been made on the record after an opportunity for 

an agency hearing pursuant to section 554 of Title 5 before an 

administrative law judge . . . .” Id. § 823b(d)(2)(A). Any

resulting assessment order “shall include the administrative 

law judge’s findings and the basis for [the] assessment.” Id.

In response to FERC’s order, Kourouma submitted an 

affidavit in which he admitted that he falsely used the name of 

his daughter on a form submitted to FERC and the name of a 

friend on a form submitted to PJM instead of his own name.

He explained that he used those names “in order to avoid 

making Energy Endeavors aware” of his involvement in 

Quntum.

Regarding his procedural options, Kourouma urged the 

Commission to dismiss the case against him by summary 

disposition. If the Commission chose not to dismiss the 

charges, he asked for an administrative hearing. The 

Commission determined the matter fit for summary 

disposition, but against Kourouma, not for him. Relying on 

the admissions of false filings Kourouma made in his 

affidavit, the Commission held that Kourouma violated 

Market Behavior Rule 3 and assessed a $50,000 civil penalty 

payable over five years to accommodate his financial 

condition.

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In this petition for review, Kourouma alleges that FERC

committed procedural and substantive errors. We have 

jurisdiction under 16 U.S.C. § 823b(d)(2)(B). See Bluestone 

Energy Design, Inc. v. FERC, 74 F.3d 1288, 1293 (D.C. Cir. 

1996).

II

We first consider Kourouma’s argument that he was 

entitled to an administrative hearing under 16 U.S.C. 

§ 823b(d)(2)(A). 

We agree with FERC that Kourouma’s admissions 

supported summary disposition without a hearing. FERC Rule 

of Practice and Procedure 217 provides that when “there is no 

genuine issue of fact material to the decision of a 

proceeding . . . , [FERC] may summarily dispose of all or part 

of the proceeding.” 18 C.F.R. § 385.217(b). That rule does not 

run afoul of § 823b. We have routinely recognized that an 

agency need not hold an administrative hearing when no 

material facts are in dispute. As we stated in Citizens for 

Allegan County, Inc. v. Federal Power Commission,

the right of opportunity for hearing does not require a 

procedure that will be empty sound and show, 

signifying nothing. The precedents establish, for 

example, that no evidentiary hearing is required where 

there is no dispute on the facts and the agency 

proceeding involves only a question of law.

414 F.2d 1125, 1128 (D.C. Cir. 1969) (citations omitted); see 

also, e.g., Moreau v. FERC, 982 F.2d 556, 568 (D.C. Cir. 

1993) (holding that the Natural Gas Act’s hearing provision, 

15 U.S.C. § 717f, does not require a hearing “when there are 

no disputed issues of material fact”); Pa. Pub. Util. Comm’n 

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v. FERC, 881 F.2d 1123, 1126 (D.C. Cir. 1989) (stating that 

“we have often held . . . that a formal trial-type hearing is 

unnecessary where there are no material facts in dispute”

(citations omitted)). Here, after receiving Kourouma’s 

admissions, FERC faced only a question of law: Did 

Kourouma’s admitted actions amount to a violation of Market 

Behavior Rule 3? No evidentiary hearing was needed.

We have never had occasion to consider this issue with 

regard to § 823b(d), but the principle upon which we rely is 

well-established. “Even when an agency is required by statute 

or by the Constitution to provide an oral evidentiary hearing, 

it need do so only if there exists a dispute concerning a 

material fact.” 1 RICHARD J. PIERCE JR., ADMINISTRATIVE 

LAW TREATISE § 8.3 (5th ed. 2010) (citing, e.g., Weinberger 

v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609 (1973)). 

This holds even where, as here, the governing statute requires

that final civil penalty orders “shall include the administrative 

law judge’s findings.” 16 U.S.C. § 823b(d)(2)(A). When the 

regulated party’s own admissions make clear that no material 

facts are in dispute, it is unnecessary to require a judge to 

recite these facts as “findings” after a hearing. As we have 

already stated, Kourouma’s affidavit makes the violation 

clear. In the affidavit he submitted to FERC in response to the

order to show cause, Kourouma admitted that he falsified and 

omitted multiple names on his forms, and that he had kept his 

involvement in Quntum a secret to avoid alerting Energy 

Endeavors to his violation of the non-compete. Kourouma’s 

admissions resolved all disputes of material fact, making an 

evidentiary hearing unnecessary.

III

Kourouma next argues that FERC erred because there 

was no showing that he had any intent to deceive FERC or 

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PJM with his false filings. But intent to deceive is not an 

element of Market Behavior Rule 3. The Rule’s plain text

lacks any reference to intent and forgives false or misleading 

submissions only if they are made inadvertently despite the 

filer’s due diligence to avoid such errors. The text provides no 

hint that a seller would be in the clear if, for example, he 

submitted false information recklessly, but without ill will. To 

the contrary, the fact that only due diligence excuses a false 

filing implies even negligent misrepresentations may be

actionable. Contrary to Kourouma’s assertion, so read, Market 

Behavior Rule 3 does not subject filers like Kourouma to 

strict liability, but reserves punishment for those who do not 

act with requisite care when submitting information to FERC. 

Because Kourouma’s actions were worse than careless, FERC 

reasonably concluded that he violated Market Behavior Rule 

3.

∗

Kourouma argues as well that he had no notice that 

FERC would read the Rule so broadly and might move

against those who lacked intent to deceive FERC or regional 

 ∗ Without a requirement of intent, Kourouma argues, the Rule 

fails to provide constitutionally adequate notice to regulated parties 

of what is forbidden and invites discriminatory enforcement. See

Hill v. Colorado, 530 U.S. 703, 732-33 (2000); City of Chicago v. 

Morales, 527 U.S. 41, 56 (1999). But these constitutional 

challenges to a garden-variety ban on making false statements to 

regulators are meritless. As discussed above, the Rule’s clear terms 

provide sufficient notice to regulated parties of what conduct the 

Rule prohibits, and those clear enforcement parameters prevent 

FERC from engaging in unconstitutionally discriminatory 

enforcement. To the extent Kourouma argues that he received 

harsher treatment because he decided to withdraw his FERC 

application rather than amend it, his argument is unconvincing. 

There is no evidence that his decision to withdraw his FERC 

application resulted in disparate treatment.

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transmission organizations like PJM. Indeed, although we 

typically defer to agencies’ interpretations of their own 

regulations, we also require agencies to provide fair notice of 

the actions they consider unlawful. See, e.g., PMD Produce 

Brokerage Corp. v. USDA, 234 F.3d 48, 52 (D.C. Cir. 2000). 

This ensures that “a regulated party acting in good faith” will

be able “to identify, with ascertainable certainty, the standards 

with which the agency expects parties to conform.” Star 

Wireless, LLC v. FCC, 522 F.3d 469, 473 (D.C. Cir. 2008)

(internal quotation marks omitted).

Not only does the plain language of § 35.41(b) provide

ample notice that FERC will enforce the Rule without 

requiring intent, but the Commission’s prior public statements 

regarding § 35.41(b) confirm the point as well. For instance, 

in 2004, FERC considered but rejected the option of adding 

an “express intent requirement” to § 35.41(b). See 

Investigation of Terms and Conditions of Pub. Util. MarketBased Rate Authorizations, 107 FERC ¶ 61,175, 61,715

(2004). FERC eschewed this proposal, leaving the due 

diligence safe harbor as the only exception to the rule. See id.

And although the initial promulgation of Market Behavior 

Rule 3 stated that the Rule was “prohibit[ing] the knowing 

submission of false or misleading data,” that statement was 

intended to clarify that “inadvertent submission of inaccurate 

or incomplete information will not be sanctioned.”

Investigation of Terms and Conditions of Pub. Util. MarketBased Rate Authorizations, 105 FERC ¶ 61,218, 62,157

(2003). Moreover, the 2004 commentary on the Rule made 

clear that FERC’s goal was to ensure that inadvertent false 

submissions would not be penalized. See 107 FERC ¶ 61,175,

61,715. Kourouma’s false filings were not inadvertent.

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IV

Next, we briefly turn to three arguments that sound under 

the Administrative Procedure Act. We find each of them to 

lack merit.

First, Kourouma claims that FERC failed to follow its 

own summary disposition rule that evidence must be “viewed 

in light most favorable” to the non-moving party. See Phillips 

Pipe Line Co., 67 FERC ¶ 63,002, 65,002 (1994). Departing 

from precedent without explanation is a form of capricious 

agency action. See, e.g., Lone Mountain Processing, Inc. v. 

Sec’y of Labor, 709 F.3d 1161 (D.C. Cir. 2013). But the 

summary disposition rule requires only that FERC draw all 

“reasonable” inferences in Kourouma’s favor. See, e.g., 

Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 

150 (2000). Kourouma wishes that FERC would simply 

accept his explanation that his actions were inadvertent. See 

Pet’r’s Br. 35. But as we have already shown, such an 

inference could not be reasonable.

Second, at a late stage in the administrative process, 

Kourouma sought to introduce new evidence, and he argues 

that FERC’s decision to exclude it was an abuse of discretion. 

But FERC Rule of Practice and Procedure 213 prohibits 

respondents from submitting additional answers, see 18 

C.F.R. § 385.213(a)(2), and it was no abuse of discretion to 

adhere to the rule.

Third, Kourouma argues that FERC failed to support its 

imposition of a $50,000 penalty with substantial evidence,

thus violating 5 U.S.C. § 706(2)(E). But FERC’s decision to 

impose a $50,000 penalty is rationally supported by multiple 

pieces of evidence. FERC highlighted the fact that Kourouma 

acted deliberately, and remarked upon the seriousness of the 

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threat posed by Kourouma’s actions to transparent market 

operations. In particular, FERC pointed to the inability to 

properly evaluate Kourouma’s misleading forms and to the

signal his actions sent about the integrity of the energy

market. The record also belies Kourouma’s argument that 

FERC failed to consider his circumstances in imposing its 

final order. In fact, FERC tailored Kourouma’s payment 

schedule to accommodate his problems with cash flow by 

allowing him to pay his penalty over a period of five years.

Based on its judgment regarding the seriousness of 

Kourouma’s violation – especially that, in the Commission’s 

judgment, Kourouma had “knowingly and deliberately” filed 

false information, Kourouma, 135 FERC ¶ 61,245, 62,397 –

and the mitigating factor of his financial position, the 

Commission reasonably arrived at the decision to impose a 

$50,000 penalty, payable over five years.

V

Finally, we turn to Kourouma’s argument that FERC 

enhanced his penalty based on the goal of promoting general 

deterrence, in violation of Clifton Power Corp. v. FERC, 88 

F.3d 1258, 1267 (D.C. Cir. 1996). Kourouma misreads Clifton

Power. In that case, while expressly leaving the issue open, 

we questioned whether FERC could increase the dollar 

amount of a penalty recommended by an ALJ in order to deter 

other market participants. See id. at 1271. In contrast, in this 

case, Kourouma makes no showing that FERC increased his 

penalty to promote general deterrence. Indeed, the record 

shows that FERC only considered general deterrence when 

deciding whether to impose a monetary penalty, not when 

determining its amount. See Kourouma, 135 FERC ¶ 61,245, 

62,398. Thus, our unresolved discussion of general deterrence

in Clifton Power is inapposite.

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VI

For the foregoing reasons, the petition for review is 

denied.

So ordered.

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