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Verbatim: Daniels fires IURC chairman

Statement issued Tuesday:

INDIANAPOLIS (October 5, 2010) -- Governor Mitch Daniels today terminated the employment of David Lott Hardy, chairman of the Indiana Utility Regulatory Commission, effective immediately, and appointed IURC Commissioner Jim Atterholt as the commission’s new chair.

The action follows the departure of the IURC’s general counsel Scott Storms, who accepted employment with Duke Energy of Indiana in September, and a letter Daniels sent shortly thereafter to Hardy outlining his expectations of the IURC in upholding a formal ethics opinion on the matter.

David Pippen, the governor’s general counsel, also sent a memo to all executive branch agency heads. The text is below.

To: All Agency Heads/General Counsels

From: David Pippen, General Counsel to the Governor

Re: Ethics

Recently, a former general counsel and administrative law judge (ALJ) for the Indiana Utility Regulatory Commission left state government to work for Duke Energy of Indiana, a regulated entity. I wrote a letter to the IURC explaining the Governor’s interpretation of the spirit and intention of the ethics reform he spearheaded when he came to office. In short, he will not tolerate even the appearance of impropriety.

Upon the Governor’s direction, an internal review of the matter revealed the lawyer was communicating with Duke regarding a position with the company at a time he was presiding over administrative hearings concerning Duke. Additionally, the agency head was aware of the communications and did not remove the lawyer from matters for which the lawyer was now conflicted.

So you understand the seriousness of this matter, I want you to know our response:

1. The Governor has terminated the employment of the chairman of the IURC;

2. The administrative opinions over which the ALJ presided regarding Duke will be reopened and reviewed to ensure no undue influence was exerted in the decisions;

3. The one-year cooling off period for decision makers are to be considered to include ALJs who preside over information gathering and order drafting; and

4. The matter has been referred to the Inspector General to determine if any laws were broken or misinformation given to the Ethics Commission when requesting a formal opinion;

To reiterate the ethics rules as they relate to regulated entities:

1. No ALJ should engage in communications with regulated entities regarding possible employment without recusing oneself from matters appearing before that regulator;

2. Administrative opinions over which an ALJ presided while pursuing employment opportunities with the regulated entity will be reopened and reviewed to ensure no undue influence was exerted in the decision;

3. The one-year cooling off period for decision makers includes ALJs who preside over information gathering and order drafting; and

4. Violations of these points will be referred to the Inspector General.

Please advise your staff to avoid this circumstance in the future.

Atterholt’s appointment is effective immediately. The governor will request that the IURC Nominating Committee begin the process of accepting applications to fill the open position on the commission.

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