Last week, a contentious, long-running saga came to an end when a D.C. Council panel voted 3 to 2 against appointing consumer advocate Elizabeth A. Noel to the Public Service Commission, the body charged with regulating District utilities.
The key vote on the matter came from Council member Phil Mendelson (D-At Large), who is generally labor-friendly and a reliable advocate for consumer protection measures. Mendelson’s opposition to Noel fairly stunned Noel’s advocates in labor and activist groups that have generally been supportive of Mendelson in past.
Mendelson acknowledged in comments before the Thursday vote that the matter has “been one of the more uncomfortable issues I’ve had to vote on,” but said Noel lacked the “judicial temperament” for the job.
That echoed complaints raised by Pepco, the electric utility, which Noel had battled for years in her previous job as people’s counsel — a government-appointed attorney that represents the public in rate cases and other utility matters.
Pepco was the most vocal opponent to Noel, fearing that she wouldn’t give the company a fair shake on a commission that rules on its rate increase requests, among other matters. It also argued that her prior role meant she would have to recuse herself from a significant number of the commission’s current cases.
But there’s also another recusal issue at stake, having to do with Mendelson. According to his last financial disclosure statement filed with the Office of Campaign Finance, Mendelson owns Pepco Holdings stock, which raises the question of whether he has a financial conflict that should have precluded his voting on the nomination.
His Pepco stock holdings are “modest,” Mendelson said, but exceed the $5,000 threshold for disclosure.
Mendelson said the stock doesn’t represent a conflict. “That was not my consideration,” he said Monday, reiterating his objections to Noel’s “judicial temperament.” He noted that while owning the same Pepco stock he had previously supported Noel’s appointments as people’s counsel.
While Mendelson said he did not seek advice on whether the Noel confirmation representing a conflict, he noted that he had previously been cleared to vote on matter that affected a company he held stock in. In 1999, the campaign finance office ruled that he was free to vote on a merger deal involving AT&T, of which he owed 225 shares.
City law says public officials shall not “use his or her official position or office to obtain financial gain for himself or herself,” and council members are also covered by federal law barring officials from participating “personally and substantially” in decisions where they have a financial interest.
But the 1999 opinion said Mendelson involvement with AT&T was permissible, finding in the case of local law that it fell within an exception for matters where the official is part of a class of 50 or more and “the financial gain to be realized is de minimis.” With respect to federal law, the opinion found that the federal restriction extended only to voting on matters that “will have a direct and predictable effect” on the interest in question.
”A predictable effect is found where there is a real, rather than speculative, possibility that the matter will affect the financial interest,” the opinion reads. “[I]t would appear that the passage of the legislation will not have a direct and predictable effect on Mr. Mendelson’s holding of AT&T stock.”
Mendelson said he considered the Pepco situation analogous to the AT&T situation and did not seek a new opinion.
Federal law demands an official make “full disclosure of the financial interest” and “receive in advance a written determination” of the particular matter. But note that even if he had sought a new opinion, the Office of Campaign Finance couldn’t have given him one as of late January — when new ethics legislation transferred conflict of interest regulation to the new Board of Ethics and Government Accountability, which is not expected to start operations until October at the earliest.
Wesley Williams, an Office of Campaign Finance spokesman, said Tuesday that in the interim, a council member could seek guidance from the Council’s general counsel or the D.C. attorney general.
Whether or not Mendelson might have run afoul of the law, he has to deal with disappointed political supporters. Jim McGrath, the veteran tenant organizer who TENAC has long backed Mendelson’s campaigns, said news of his Pepco investments “gives me real pause.”
”It’s a terrible disappointment,” he said of Mendelson’s vote on Noel. “We’ve been with him every single time, but on this vote, it’s inexplicable.”