Energy Law

FERC Augments, Revamps Enforcement Guidance and Procedures

By Andrea Kells

FERC has taken several steps to clarify its policies for conducting enforcement investigations, carrying out its authority to impose penalties on violators, and broadening the scope of issues to be covered by its ex parte rules and no-action letter procedures.  The additional guidance is welcome in light of the seemingly haphazard approach to enforcement that FERC has taken over the last couple of years. 

FERC?s new Revised Policy Statement on Enforcement supersedes its 2005 Policy Statement on Enforcement.  The Revised Policy Statement affirms FERC's existing enforcement policies and explains the usual steps involved in FERC's conduct of audits and enforcement investigations.  It describes the types of matters that FERC has recently determined do not merit investigation or that have not resulted in findings of a violation or sanction.  It lists several actions that entities can take to develop strong compliance programs, and offers suggestions for making effective self-reports.  Finally, it augments the current list of factors that FERC will consider when determining the seriousness of an offense:

• What, if any, harm was there to the efficient and transparent functioning of the market?
• What are the earnings, revenues and market share of the part of the company that is under investigation?
• What penalty amount best deters improper conduct, while not excessively discouraging beneficial market participation?
• What was the motivation of those accused of the improper conduct?
• Was the integrity of the regulatory process impaired:
• Was there a risk of serious harm, even if the actual harm was slight of non-existent? 

FERC also issued a Notice of Proposed Rulemaking (NOPR) to clarify its regulations governing ex parte contacts (Rule 2201) and separation of functions (Rule 2202) in the context of non-public investigations.  Rule 2202 prohibits FERC staff that act as litigators in an adjudicated proceeding from advising as to the outcome or decision in that proceeding.  The NOPR proposes that this separation begin at the point when FERC issues a show-cause order in a proceeding or initiates a civil action under Part 1b of FERC's regulations.  The NOPR also proposes to apply FERC's ex parte rules during investigations conducted under Part 1b, where they do not currently apply.   

Full post as published by Energy Legal Blog on May 20, 2008 (boomark / email).