Energy Law

FERC, Industry Exchange Views on Enforcement

By Andrea Kells

Two years after Congress granted FERC enhanced enforcement authority in the Energy Policy Act of 2005 and FERC issued its Policy Statement on Enforcement, and following the first year in which FERC has acted on this authority, FERC this month held a technical conference to discuss how it is implementing its new authority.  The conference revealed a gap between how FERC understands and is implementing its enforcement authority and an industry that is uncertain what is expected of it and fearful of the penalties it could unwittingly incur.  

In anticipation of the conference, a coalition of seven trade groups representing the electric and natural gas industries submitted a white paper highlighting concerns with FERC's implementation of its enforcement authority.  The coalition urged FERC to ensure that penalties fit the infraction.  It also warned FERC not to enforce against legitimate market behavior. 

In a statement issued prior to the conference, FERC Chairman Kelliher responded to the white paper and tried to clarify FERC's approach to implementation of its enforcement authority, disclosing that FERC intended to focus on punishing violations that cause the most serious harm or entail great risk of serious harm, violations of core regulatory requirements, and companies with weak compliance programs.  He cited FERC staff's report tallying the 64 enforcement investigations conducted in the last two years to argue that FERC has exercised this authority fairly, pointing out that of those, 47 concluded with no sanctions imposed and the remainder resulted in 13 settlements involving civil penalties and two show-cause orders.  Kelliher touted the value of self-reporting, and clarified that FERC will consider both actual and potential harm as the most important factor when determining a penalty. 

Full post as published by Energy Legal Blog on November 29, 2007 (boomark / email).