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Energy Associations Call for More Transparency and Efficiency at FERC Enforcement

On June 19, 2019, a group of natural gas and power trade associations filed a white paper with the Federal Energy Regulatory Commission (FERC) calling for more transparent and efficient enforcement investigations by the agency. The white paper, titled “Enhancing the Transparency, Efficiency, and Fairness of the Federal Energy Regulatory Commission’s Enforcement Program,” was intended as a check-in on FERC Enforcement’s policies in the 13 years since the Energy Policy Act of 2005 was enacted. The paper also commends FERC on promoting a nationwide culture of compliance, and offers several proposals intended to streamline the transparency, efficiency, and fairness of the enforcement process. Those proposals include:

  • Increasing transparency with investigation subjects. Providing information at the outset of an investigation allows subjects to better understand the nature of the investigation and staff’s views and concerns. Encouraging earlier and more frequent meetings with subjects and their counsel to discuss the facts and potential violations leads to a more collaborative approach whereby subjects can better recall and explain the specific conduct. Providing subjects with all relevant data before depositions are taken helps to cut down on inefficiencies and streamline the investigative process. Enforcement should also strive to inform parties in writing when an investigation is closed to provide finality to the process.

  • Creating a procedures manual to shed light on FERC’s investigatory process. Updating the 2008 Revised Policy Statement on Enforcement would provide guidance and certainty to market participants and help ensure that Enforcement approaches investigations with a common process.

  • Allowing subjects to meet with FERC Commissioners after the start of an investigation and prior to the issuance of an Order to Show Cause.

  • Making investigations more efficient by (a) narrowly tailoring discovery requests to the conduct and time frame at issue; (b) utilizing technology-assisted document review processes to reduce the amount of manual attorney time required for standard document reviews; (c) question witnesses through more frequent informal interviews in addition to requisite formal depositions; and (d) complete fact gathering in six months or explain the reason for the delay.

  • Ensuring civil penalties are not higher than necessary to achieve compliance. Penalties should be transparent, understandable, fair, and reasonable.

  • Formally repealing the Notice of Alleged Violations (NAV) policy, which FERC did on May 16, 2019.

  • Improving market participation and liquidity through reforms to FERC’s price reporting policy. FERC’s current price reporting policy increases regulatory risk for price reporters. To combat this, FERC should (a) change the self-audit requirement from an annual to a biannual requirement; (b) allow market participants to price report in either the daily or monthly market without risk of such reporting being considered “selective”; and (c) clarify and strengthen the safe harbor provisions.

  • Addressing the statute of limitations policy in light of court rulings by deciding as a matter of policy to file de novo review actions under the Federal Power Act in federal court within five years of the unlawful conduct.

  • Improving the transparency and efficiency of audits by keeping the scope of the audit defined, using standardized data requests, and clearly communicating to the subject the status and timeline of the audit.

It is unclear how or whether FERC and its Enforcement Division will address the proposals in the white paper, but the authors offer several common-sense proposals that will streamline the enforcement process, make it more fair to targets, and provide increased guidance to all market participants. FERC has already discontinued the NAV policy, issues annual reports of Enforcement’s activities, and resolves many investigations without penalty. The additional steps the white paper recommends will expand transparency and assist the industry in complying with the FERC’s statutes, regulations, and policies.

©2020 Pierce Atwood LLP. All rights reserved.


About this Author

Ruta Skučas Energy Electric Natural Gas Attorney

Ruta Skučas counsels her clients on energy issues, focusing primarily on electric and natural gas matters, before the Federal Energy Regulatory Commission (FERC), state and federal entities, including federal courts and state public utility commissions. Her clients range from financial institutions and power marketers to traditional utilities.

Ruta's clients benefit from her years of experience working at FERC. Following graduation from law school, she served as law clerk to several FERC Administrative...

Valerie L. Green Pierce Atwood Partner DC  Energy Energy Infrastructure Project Development  Finance Litigation

Valerie Green focuses her practice on natural gas, electricity, renewable energy, and regulatory and compliance issues involving the Federal Energy Regulatory Commission (FERC) and other administrative agencies. Clients rely on Valerie’s responsiveness, attention to detail, and deep knowledge of regulatory process and precedent in proceedings involving administrative litigation, compliance audits and investigations, and in appellate litigation before the U.S. Court of Appeals for the District of Columbia Circuit. Valerie’s focus on coalition and consensus building in situations involving difficult, contentious issues frequently results in successful, advantageous settlements for her clients.

Valerie has extensive experience with a wide range of energy-related issues, including regulation under the Natural Gas Act, Natural Gas Policy Act of 1978, the Federal Power Act, the Public Utility Regulatory Policies Act, and FERC’s regulations implementing those statutory regimes. Valerie advises natural gas shippers on pipeline rate and tariff issues, and has advised natural gas pipelines on their rate cases, Standards of Conduct, FERC’s capacity release rules, and other regulatory issues.

Drawing on her deep knowledge of Independent System Operator and Regional Transmission Organization (ISO/RTO) tariffs and operations, Valerie regularly assists clients as they navigate electric transmission issues, and she protects her clients' business interests in the electric grid.

Maeve C. Tibbetts Pierce Atwood DC Associate Energy Infrastructure Project Development  Finance

Maeve Tibbetts focuses her practice on regulatory and enforcement matters before the Federal Energy Regulatory Commission (FERC) and state public utility commissions. Maeve represents energy traders active in the ISO/RTO markets and counsels clients involved in formal and informal investigations by FERC's Office of Enforcement.  She also represents members of the Financial Marketers Coalition in stakeholder proceedings before PJM and other ISOs/RTOs.  Her clients include financial institutions, power marketers, electric and natural gas utilities, renewable energy firms, retail electric...

Randall S. Rich Pierce Atwood Partner DC Energy Energy Infrastructure Project Development & Finance

Randall Rich is the Leader of our Energy Practice Group and the partner-in-charge of the Washington, DC office. Throughout his over 38 years of experience, beginning in the Office of General Counsel of the Federal Energy Regulatory Commission (FERC) and continuing for more than 23 years at Bracewell, LLP, Randy always strives to form close personal bonds with clients as well as trusting relationships with both regulators and his colleagues in the energy bar. He gains an intimate understanding of the business and legal needs of clients by working for extended periods in their offices, hand-...

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