In its updated guidance issued on April 30, the US Department of Justice Criminal Division places effectiveness at the epicenter of its factors to be utilized when evaluating a company’s compliance program in the context of a criminal investigation. As corporate compliance programs continue to be closely scrutinized, companies and their boards, senior management, and legal and compliance departments should tailor their corporate compliance programs to issues and risk areas specific to the company’s business. Senior management plays a critical role in identifying these issues and risk areas and must serve as an example and enforcer of good compliance practices. Companies cannot let their compliance programs get stale and must continue to innovate, revamp, and enhance their corporate compliance practices based on lessons learned. DOJ emphasizes that “one hallmark of an effective compliance program is its capacity to improve and evolve.”
The US Supreme Court has denied a petition for certiorari filed by the Delaware Riverkeeper Network, which challenged a decision by the US Court of Appeals for the Third Circuit concerning Pennsylvania’s water quality certification for Transcontinental Gas Pipe Line Company LLC’s (Transco’s) Atlantic Sunrise Project. The project expands Transco’s interstate pipeline network in Pennsylvania and on the East Coast. The Supreme Court’s April 29 denial comes as another success for the project, which has been defending against several challenges, first at the agency level and now at the appellate level, since Atlantic Sunrise first filed its FERC application to construct and operate the expansion facilities in March 2015.
A recent policy statement from the Office of Management and Budget (OMB) instructs departments and agencies—including independent agencies like FERC—to submit “guidance documents, general statements of policy, and interpretive rules” to the OMB’s Office of Information and Regulatory Affairs (OIRA) for prepublication review. It also establishes guidelines for the OIRA to apply to properly classify regulatory actions and determine whether they are “major” rules for purposes of the Congressional Review Act (CRA). This major determination process will take full effect on May 11, 2019.
Electric power generation and sale customarily fall within the scope of FERC jurisdiction under the Federal Power Act, as amended, as do generator investment and ownership. Qualifying small power production facilities (Small Power QFs) of no larger than 20 MW (net AC) are usually exempt from FERC regulation of mergers, acquisitions, divestitures, power sale rates, and related regulation under the Public Utility Holding Company Act. Small Power QFs are also normally exempt from state utility commission regulation of corporate, financial, and power sales rate matters. These Small Power QF regulatory exemptions are widely viewed as helpful and appropriate by industry stakeholders ranging from generation investors to traditional franchised utilities, and residential and commercial generation users.
FERC issued a Notice of Inquiry (NOI) on March 21 seeking stakeholder comment on the scope and implementation of its electric transmission infrastructure development incentives regulations and policy. The NOI seeks answers to whether and how FERC should update its rules and policies in this area through more than 100 questions organized into four broad categories:
- FERC’s incentive policies and how it should approach evaluating applicants’ requests for transmission development incentives, including its Return on Equity (ROE) adder policy
- What expected benefits or project characteristics warrant incentives, including whether the Commission should consider reliability benefits, economic efficiency benefits, security, or resilience in that determination
- Whether existing incentives, including the ROE adder, remain relevant and appropriate today
- Whether particular types of infrastructure development incentives should automatically sunset, and under what certain circumstances that should happen
The Federal Energy Regulatory Commission (FERC or Commission) appears to be inching closer toward a resolution on grid operators’ proposals to facilitate electric storage participation in organized capacity, energy, and ancillary service markets. On April 1, FERC’s Office of Energy Market Regulation (Staff) directed each of the Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) that submitted compliance filings in response to FERC’s Order No. 841 to submit additional information on the mechanics of their proposed energy storage market rules. Those latest actions by Staff break FERC’s recent silence on the grid operators’ proposals, which were submitted to the Commission over four months ago and which must be implemented as early as December 2019.
Although tailored to each ISO’s and RTO’s proposal, Staff’s requests were largely centered on the same general areas and directed the ISOs and RTOs to further explain how the mechanics of their proposed storage participation models meet compliance with Order No. 841. For example, among other things, Staff sought more information on how the ISOs and RTOs will:
The North American Electric Reliability Corporation (NERC) petitioned the Federal Energy Regulatory Commission (FERC) on March 7 to approve a revised reliability standard for electric utilities aimed at enhancing existing cybersecurity incident reporting. The proposed CIP-008-6 reliability standard would expand the scope of the type of assets subject to incident reporting and the categories of incidents affecting those systems that must be reported. If FERC approves the standard as proposed, compliance will require more comprehensive internal controls for identifying, reviewing, and reporting cyber incidents affecting electric utilities.
As we reported in December 2018, to jumpstart the energy storage market as envisioned by Governor Andrew M. Cuomo, the New York Public Service Commission (NYPSC) issued an order establishing an aggressive 3 GW energy storage goal by 2030, with an interim target of 1.5 GW by 2025, and directing investor-owned electric utilities (IOUs) to engage in competitive procurements for energy storage. The IOUs will issue draft requests for proposals (RFPs) this summer following a stakeholder process that kicks off on March 29.
A recent advisory published by the Commodity Futures Trading Commission’s Division of Enforcement and comments of the division director have highlighted the CFTC’s attention toward investigating potential violations of the Commodity Exchange Act (CEA) that involve foreign corrupt practices. On March 6, CFTC Director of Enforcement James M. McDonald addressed this very issue in remarks before the ABA National Institute on White Collar Crime. At the same time, the division issued an Enforcement Advisory providing guidance on how the CFTC will treat instances of self-reporting and cooperation concerning CEA violations that also involve foreign corrupt practices.
In response to state legislation enacted last year, the New Jersey Board of Public Utilities (BPU) is seeking comments concerning the state of and prognosis for energy storage development within the State of New Jersey. New Jersey enacted the Clean Energy Act on May 23, 2018. Among other things, the act requires the BPU, in consultation with the regional grid operator, PJM Interconnection, LLC, and other stakeholders, to conduct an energy storage analysis and submit a written report on energy storage to the governor and legislature by May 23, 2019.