New Energy Economy filed an application for cross-examination or disqualification of Attorney Marcus Rael, citing an apparent conflict of interest between his representation of Avangrid/Iberdrola in the merger case and his concurrent legal representation of the Office of the Attorney General (and by extension the people of New Mexico), and specifically the people of Bernalillo County, in a variety of other cases.
After requesting and receiving Joint Applicants, Bernalillo County and the Attorney General's office response to these concerns, the Hearing Examiner today issued an Order disqualifying Marcus Rael from representation of Iberdrola in the merger. He writes:
NEE has shown, under an objective standard, that a concurrent conflict of interest exists for Mr. Rael in this proceeding under Rule 16-107(A). NEE has shown that Mr. Rael’s representation of Iberdrola (on behalf of Avangrid) in this case is directly adverse in this proceeding to the interests of the Attorney General (and the public the Attorney General represents) and to the interests of Bernalillo County. The Attorney General’s initial position in this case recommended denial of the merger and acquisition transactions proposed by the Joint Applicants for the Commission’s approval. The Attorney General’s position changed during the course of the proceedings when it signed on to the Stipulation in this case.
He noted Avangrid/Iberdrola claims that when Iberdrola engaged the Robles Law Firm, Iberdrola did not believe that Iberdrola's interests were adverse to the interests of the AG and Bernalillo County, despite their own statement that Iberdrola hired Marcus Rael to assist in settlement of the parties' adverse positions in the case. He also noted the AG's failure to address the opposing interests of Iberdrola relative to the Attorney General's interest in the case, which should be to maximize the benefits to the people of New Mexico, not the profits of a corporation.
Though the Joint Applicants, Bernalillo County and the AG's office did not claim any conflict of interest, the Hearing Examiner wrote "the positions they have taken have been adverse from an objective point of view." In response to a discovery request, the Joint Applicants disclosed that Marcus Rael met with the Attorney General's office 18 times between February and April while his office was preparing its testimony opposing the merger proposal. During those meetings, the Hearing Examiner writes, if Rael was advocating for Iberdrola or for the interests of his other clients, the AG or Bernalillo county, his representation at that time would be adverse to at least one of them, and none had given the legally-required informed consent.
He stated that the Hearing Examiner and the Commission can and will consider the actions of Iberdrola and the AG's office as they deliberate on the settlement and the testimony.
Acknowledging New Energy Economy's position that this case is not a private litigation among two parties, but a case of public interest that concerns the 530,000 ratepayers of PNM and the New Mexico economy as a whole, the Hearing Examiner writes that:
It is crucial that the proceeding and the Commission’s final decision are viewed by the public as credible and without any taint of improper influence. The Hearing Examiner and the Commission have the power and the duty under the Supreme Court’s holding in Living Cross Ambulance Serv, Inc. and NMSA 1978, §62-6-12 and §62-6-13 to inquire into and address the ethical issues raised by NEE.
IT IS THEREFORE ORDERED: Iberdrola attorney, Marcus Rael, is disqualified from further representation on behalf of Iberdrola and the Joint Applicants in connection with the issues and Stipulation in this proceeding. Iberdrola shall cease Mr. Rael’s representation for the duration of this proceeding.
The hearing examiner disqualified Marcus Rael from representing Iberdrola because of his obvious conflict of interest in negotiating a deal with the AG, who is charged by law with protecting the ratepayers and who has been hiring Marcus Rael over and over to represent the State and people of New Mexico in many other matters that are going on right now. The Hearing Examiner quite properly held that Rael can’t serve as the lawyer for the State and its people in some matters and switch sides just to help Iberdrola make a deal with the AG. I have little doubt that Iberdrola hired Rael to get our Attorney General to change his position on the merger because Iberdrola knew Rael was an insider in the AG’s office and a pal of the AG. Why else would Iberdrola hire him? Iberdrola, here and in Spain, seems to always be looking for some tricky angle to get its way. Why doesn’t it just present its and its subsidiary’s qualifications for taking over PNM’s monopoly to the PRC and let the PRC decide whether the takeover is in the public interest. Iberdrola’s top management is under criminal investigation in Spain, and its performance after taking over Maine’s utility is the subject of a scathing audit. We should see its hiring of Real, the criminal investigation in Spain and Maine’s audit of its performance there as real warning signs for us here in New Mexico.