Back in 1962, when an American Airlines jetliner plunged into New York's Jamaica Bay, Max L. Kane decided he had worked long enough taking midnight depositions from the witnesses of airplane crashes. l
So Kane left the job he had held since 1946 as the Justice Department's chief trial attorney for air crashes and became a federal judge. He didn't become the kind of federal judge who gets there by presidential appointment and hears criminal cases in U.S. district courts.Kane became an administrative law judge, joining a cadre of jurists who labor far from the public eye but whose numbers exceed district court judges and whose cases exceed those heard in the federal judicial system.
Though he wears the black robes of a federal judge, Kane works for the Federal Energy Regulatory Commission, not the Justice Department. He's one of 20 judges at FERC, where he hears cases that set the prices industry can charge for electricity and natural gas and the rates it can charge to transport oil through its pipelines.
Kane's cases are far from trivial. A decision he made earlier this year in the Trans-Alaskan Pipeline System case meant a loss to the eight companies that own the pipeline of $758 million over 1978 and 1979. Legal fees in that decision came to more than $2 million.
When Congress passed the Administrative Procedures Act in 1964, there were 200 administrative law judges serving the federal government. Today, there are 1,103 and 109 openings for new ones. No fewer than 29 federal departments and agencies employ these judges.
Though they may not make headlines, decisions of administrative law judges affect the products we buy, the planes we fly and the television we see. Any time the recipient of a Social Security check follows up on a formal complaint, it's heard by one of 654 administrative law judges who work for the Social Security Administration.
At the heart of the ALJ system are the 323 judges who hear cases for the 24 federal regulatory agencies, which average seven ALJ's apiece. Ten work for the Federal Trade Commission, 12 for the Federal Communications Commission and 40 for the Interstate Commerce Commission.
"In my view, the system works," FTC Chairman Michael Pertschuk told the Senate Commerce Committee's subcommittee on the consumer last week. "It not only works but it works well."
Now 71, Max Kane may be one of the oldest administrative law judges still on the bench. He's also one of the most respected. "Max is crusty and argumentative," said one Washington lawyer who's argued cases before him for the last 12 years, "but he does his homework and pays attention to what's said in court."
A typical Max Kane hearing took place earlier this week in a large, hot hearing room at FERC. The backroom seats were filled with law students, more than half of them women. Two long tables in the front were crowded with lawyers, 30 to each table. They were all men and almost all of them wore dark suits and white shirts.
The issue before Kane was the cost of the Alaska pipeline. While he had already decided what rates the pipeline can charge to transport oil, that decision covered only the next two years. Before him now was the question of whether the $9.2 billion the pipeline's owners said it cost them to build it was a prudent cost.
"The original estimate of the cost of a slightly smaller pipeline was less than $1 billion," Kane said in an interview earlier this week. "Therefore, the issue here is the prudency of the investment because the rates are determined mostly on the basis of cost."
At one table in front of him last week were the lawyers for the eight oil companies that own the Alaskan pipeline. At the other were the lawyers whose client is the state of Alaska. If the state can prove that the $9.2 billion was an imprudent investment and Kane lowers the rates the oil companies can charge to ship oil, the difference will go to the treasury of the state of Alaska.
The issue the other day wasn't the pipeline's cost. It was the date at which Kane would begin the trial in the case, a date that hinges on how quickly the oil companies were willing to reproduce documents describing construction of the 800-mile-long pipeline.
The lawyers for the state of Alaska were insisting the pipeline reproduce 150,000 documents a week for them to examine. The lawyers for the pipeline said they could do no better than 50,000 pages a week. lThe lawyers for Alaska said if that were the case the trial could never begin March 31, 1981, a date Kane wanted to meet.
In the end, Kane compromised on a trial date. He set the date for the first hearing on the issue of the pipeline's cost for Nov. 16, 1981. That probably means the case won't be finished until well into 1982. Kane began hearings into the first phase of the case in 1978.
"That's not unusual," Kane said. "In the first phase of this case, we had 131 hearing days and 25,000 pages of transcript. My written decision in the first phase ran 150 pages."
Such is the life of an administrative law judge. Kane remembers two cases he had in years gone by that ran just as long as the Alaskan pipeline case is running.
One was a case that involved the rates that could be charged for natural gas going from Texas and Oklahoma through a new pipeline to the north. That took three years to complete. The other was over what price could be charged for liquefied natural gas coming to the United States by tanker from Algeria. That took two and a half years to finish.
"That was my favorite case because it had so many twists," Kane remembered the other day. "The Algerians testified in that case and we had to have an interpreter and then there was the question of transport of natural gas by ship, which we'd never heard before. That was very interesting."
Kane likes his work as an administrative law judge. The only thing that rankles him is that his salary of $50,112 a year has been frozen by Congress while the fees of the lawyers arguing cases before him have risen to between $400 and $500 a day.
"It's a lucrative business," Kane said. "There are times that I feel I ought to be on the other side of the bench."