FERC Commissioners Philip Moeller and Marc Spitzer are asking panelists who appeared at a recent technical conference on the agency's enforcement policy to respond to a number of follow-up questions.

The questions delve deeper into issues that were raised at the Nov. 16 conference, including the self-reporting of violations, amnesty and/or forbearance for violators, whether enforcement practices used by other agencies should be adopted by the Federal Energy Regulatory Commission, and the energy industry's concern that the Commission is acting as both "judge and jury" in enforcement matters (see NGI, Nov. 19).

"Some panelists suggested that a forbearance period or 'safe harbor' be adopted for violations resulting from implementation of a robust compliance plan. Please comment on how such mechanisms may be implemented, including whether a safe harbor period should have temporal limits or be restricted to certain types of violations," Spitzer asked.

Moeller also said he was interested in the "specific details of any program involving forbearance," especially how this would lead to greater compliance in the future. "For instance, a program where reporting requirement violations that are disclosed during a one-time 'window period' would not be subject to sanctions or penalties by the Commission; however, the Commission could require that the entity engage in some form of remedial and/or prospective action. I am also interested in whether safe harbor or similar programs have resulted in greater compliance at other regulatory agencies," he noted.

Conference panelists also said the lack of clarity in FERC's enforcement program may be discouraging self-reporting of violations. "I am interested in the types of self-reports that may be discouraged by the lack of clarity in the enforcement policy. In addition, what incentives generally impact an entity's decision to self-report?" Moeller asked. Likewise, Spitzer asked panelists what steps the Commission should take to encourage more self-reporting.

Spitzer called on panelists to identify what "the Commission [should] do or what procedures should it put in place to dispel concern" that the agency is acting as "judge and jury" with respect to enforcement matters. "Please identify with specificity the provisions of the Commission's Separation of Functions Policy Statement, or other Commission procedures, that should be revised to address this concern."

A white paper issued by seven natural gas and power trade groups prior to the conference recommended that FERC expand its use of mediation in the enforcement program and identified mediation mechanisms used by other federal agencies. Spitzer asked panelists to list the steps in an audit or investigation that would lend themselves to mediation and how a mediation mechanism would be implemented in FERC enforcement proceedings.

The white paper further suggested that FERC expand its "no action letter" program, issue staff handbooks and create a 'help desk" to assist the public in understanding the Commission's enforcement program. Spitzer, however, said that "guidance issued under such mechanisms has not been binding on the Commission and, therefore some assert, of little value." He called on panelists to "explain the value that the industry would receive if the Commission adopted the suggestions of the white paper."

Some panelists pointed to practices by other agencies that could serve as a model for FERC's enforcement office, including agencies that also regulate energy companies -- the Securities and Exchange Commission, Environmental Protection Agency, the Office of Pipeline Safety and the Nuclear Regulatory Commission -- and a few agencies that don't oversee the energy market -- the Office of Thrift Supervision, Federal Deposit Insurance Corp. and Food and Drug Administration. "I am interested in whether practices used by those agencies should be considered by the Commission for adoption -- not in general terms, but specifically, and to what benefit," Moeller said.

Spitzer asked panelists to address how the Commission can assist companies in designing their programs to ensure compliance with FERC policies and regulations, as well as better educate market participants about the agency requirements.

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