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Feds Extend Due Process Rights to Operational Audit Challenges

FERC on Thursday finalized procedures to allow for enhanced due process for companies that disagree with the findings of staff operational audits. The new procedures will allow the subject of an operational audit to challenge an audit finding or proposed remedy before the Commission issues an order on the disputed matter in the audit.

The new procedures do not apply to audits pertaining to reliability that the Commission authorized in Order No. 672 on Feb. 2, 2006.

"The goal of this final rule is to assure fairness towards companies subject to staff operational audits, through which the Commission seeks to assure compliance with regulatory obligations," said Commission Chairman Joseph Kelliher.

"This rule is yet another step in our efforts to ensure firm but fair enforcement, by advancing the due process rights of all audited persons by providing an effective process for them to challenge staff audit findings," noted Commissioner Suedeen Kelly.

"As we noted in the rule, the Commission has long provided similar due process protections to parties subject to financial audits, so it's appropriate, it seems to me, to formalize and extend those protections to other audits that we conduct," she added.

FERC traditionally conducted financial audits to determine compliance with its accounting regulations. The Commission's regulations currently allow such audited companies an opportunity to challenge the staff's financial audit findings before they are made public. In recent years, the Commission has begun conducting operational audits to ensure compliance with the Commission's standards of conduct and other requirements.

The final rule adopted Thursday extends the same procedural opportunity to challenge staff findings in operational audits as is currently afforded in financial audits.

The final rule says that once the audit process is complete, if a company disputes any part of an audit it may elect a shortened procedure with briefing of matters only or a trial-type procedure, in appropriate circumstances, to move forward with the challenged portions of the audit. This process will give companies additional procedural rights prior to the Commission making a decision on the merits of the audit.

The new regulations take effect 30 days from the date the final rule is published in the Federal Register.

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