The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2018 Report on Enforcement on November 15. The report provides a review of OE’s activities during fiscal year 2018 (FY 2018), which begins October 1 and ends September 30 annually. Like last year, the report reveals likely areas of focus for FERC enforcement in the coming year, and provides guidance to the industry based on the wide variety of enforcement matters that are otherwise non-public by synthesizing some of the more disparate developments from audits, market surveillance, and other enforcement activities for the benefit of industry stakeholders.
The report indicates OE’s continued focus on the same areas of market and operational risk that have traditionally captured its attention. Particularly, OE has focused on enforcement activity concerning conduct that undermines regulated energy markets and poses a significant threat to the reliability of the bulk-power system. OE explained that its activities and objectives are consistent with FERC’s FY 2018-2022 Strategic Plan, which “sets forth a mission to account for significant changes in energy supply due to a number of factors, such as the increased availability of domestic natural gas and the emergence and growth of new energy technologies.”
The report details FERC’s continued efforts in federal courts to actively litigate enforcement matters, including related procedural questions, that were pending at the start of FY 2018. Subjects of enforcement actions have chosen to contest FERC’s findings in courts rather than through FERC’s in-house administrative proceedings, and activity in FY 2018 demonstrates that FERC has both seen successes and experienced setbacks on preliminary jurisdictional and procedural challenges raised by enforcement subjects in the cases. For example, although FERC was granted a favorable ruling by the US District Court for the District of Massachusetts concerning the proper statutory deadline by which FERC is required to file its enforcement action with a district court under the Federal Power Act, the same court granted the enforcement subjects’ motion to proceed with the litigation as an ordinary civil action subject to the Federal Rules of Civil Procedure, contrary to FERC’s position.
The report, as in previous years, indicates that the vast majority of alleged violations are addressed informally without findings or through corrective actions voluntarily implemented by the subject of the investigation, without the need for a formal settlement. The report also shows that in FY 2018, the majority of OE’s investigations arose from referrals by ISO/RTO organized market monitors.
The 2018 enforcement report will be discussed in further detail during an upcoming webinar hosted by Morgan Lewis. Please register for the webinar.