Compliance with Dodd-Frank might not be as complicated as feared; however, companies must be vigilant in order to maintain the relevant exemptions.
Penalty Predictability Enhanced
FERC modifies its enforcement guidelines.
direction, or under the supervision, or with tacit acquiescence of the organization’s governing authority, that can support denying credit.
Also, credits for several mitigation factors no longer are tied together on an all-or-nothing basis. As modified, each carries value to be independently credited or not. Two points may be subtracted from the base culpability score for a voluntarily disclosed self-report, made without unreasonable delay, reasonably promptly after becoming aware of the violation, and prior to an imminent threat of disclosure or government investigation. However, the guidelines contemplate that an organization will be allowed a reasonable period of time to conduct an internal investigation. Next, 1 point may be subtracted for full, consistent, continuing cooperation with enforcement staff. Cooperation credit will not be lost for a violator’s good faith legal or factual arguments, or its good faith objections to data requests. Finally, 1 point may be subtracted for resolving the matter without a trial-type hearing, the absence of which saves FERC time and resources, and 1 point also may be subtracted for a violator’s affirmative acceptance of responsibility for the violation.
• Penalty Fine Range : Those culpability and remediation adjustments either increase or decrease the violator’s 5-point base culpability score, determining a final, § 1C2.3 culpability score that corresponds to the important § 1C2.4 minimum and maximum penalty multipliers. A corresponding § 1C2.5 guideline penalty fine range for organizations results from multiplying the base penalty amount and the applicable penalty multipliers. Thus, an ultimate possible penalty fine range results, based on the earlier-determined final violation level and the earlier-determined degree of culpability or remediation calculation. That penalty fine range isn’t mandatory for FERC, but is fully subject to FERC discretion and flexibility as to the facts of each case.
Full FERC Flexibility
While the guidelines-based approach doesn’t restrict FERC discretion to make an individualized assessment based on the facts of a given case, the discipline of using objective guidelines factors in the first place, or during the civil-penalty assessment process, or simply the guidelines’ existence as a set of generic standards for comparison purposes, should nevertheless still result in more predictable NGA, NGPA, and FPA penalty decision-making. When the agency imposes its discretion, departing up or down from a guidelines-determined penalty fine range, the revised policy statement confirms that FERC will place on the public record the considerations that caused it to conclude such departure was appropriate. Significantly, only FERC, not its staff, can authorize departure from the guidelines, and FERC can do so regardless of staff recommendations.
Using the guidelines’ more consistent and objective characteristics to determine possible penalty fine ranges serves the public interest by enhancing penalty predictability for NGA, NGPA, or FPA violations. The guidelines make FERC’s exercise of its EPAct 2005 penalty authority more transparent. Working through such detailed guidelines mechanics should help to ensure fair FERC civil penalty assessments.
1. 15 U.S.C. § 717t-1(a) (NGA) ; 15 U.S.C. § 3414(b)(6)(A) (NGPA); 16 U.S.C. § 825o-1(b) (FPA). EPAct 2005 also increased criminal penalties, including fines and prison terms, for NGA, NGPA, and FPA violations. J. Michel