Six natural gas and power groups have asked FERC to consider temporary forbearance or amnesty for energy companies while they struggle to adapt to Commission’s new role as an enforcement agency, as well as to make revisions to its enforcement procedures to dispel industry concerns that FERC is acting as both “judge and jury.”
The groups made these requests in a joint filing Monday, which was in response to questions raised by Commissioners Philip Moeller and Marc Spitzer and Federal Energy Regulatory Commission (FERC) Chairman Joseph Kelliher at or following FERC’s conference on enforcement last month (see Daily GPI, Nov. 19).
“Market participants believe a limited forbearance program is appropriate now because, like FERC, market participants need time to adapt to the Commission’s new role as an enforcement agency, and many of the Commission’s rules lack clarity,” said the American Gas Association, Electric Power Supply Association, Independent Petroleum Association of America, Interstate Natural Gas Association of America and Natural Gas Supply Association [AD07-13].
“Modifying robust [industry] compliance programs to reflect more accurately the Commission’s priorities will take time. The suggestion of a forbearance program is limited in scope and should be considered only as compliance programs are put in place in response to the Commission’s evolving focus and in situations where regulations or policies lack clarity,” they said. As emphasized by former Commissioner William Massey at the conference, the forbearance period should be only temporary.
In an industry white paper issued prior to the November enforcement conference, market participants asked FERC to review whether it was appropriate for FERC, when adjudicating civil penalty liability in a case brought under the Natural Gas Act, to be both prosecutor and judge by first guiding the investigation of a matter and then sitting as a decision-maker in a Commission proceeding to determine liability.
“This remains a concern. In addition, the Commission’s choice of words in a show cause order can create the appearance of prejudgment of alleged violations. To address this concern, the Commission should draft show cause orders to avoid such appearances and, where appropriate, consider appending staff reports with significant detail so that it is clear that the views expressed therein are those of enforcement staff, not the Commission,” the six energy trade associations said.
“Under current Commission policies and rules, FERC enforcement staff members who perform an investigation where the Commission may assess civil penalties are not precluded from later serving as trial staff in any proceeding the Commission may establish before an administrative law judge (ALJ),” they noted.
“An enforcement staff member is permitted to discuss an investigation with the Commission up until the time that the enforcement staff member is assigned to be a litigator on [a] case. As a result, such a litigator will know the privately expressed views of the Chairman and Commissioners and will be able to craft arguments and pleadings to shape the outcome of the litigation so that the findings and conclusions of the ALJ resonate with the privately expressed views of the Commission as a whole,” the groups said.
They also recommended that FERC’s existing investigation rules, which permit a market participant that is the target of a probe to respond only when an investigating officer says it is appropriate to do so, be changed. “The Commission should consider amending this provision so that a market participant has a unilateral right to make such a submission at any time during an investigation.”
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