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Power & Pipes

FERC, CFTC, and State Energy Law Developments

The Federal Energy Regulatory Commission (FERC) issued a final rule on January 12 amending its regulations governing the maximum civil monetary penalties assessable for violations of statutes, rules, and orders within FERC’s jurisdiction.

The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended most recently by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Adjustment Act), required every federal agency to issue a rule by July 2016 adjusting for inflation each civil monetary penalty provided by law within the agency’s jurisdiction. The 2015 Adjustment Act further requires agencies to make inflation adjustments to each civil monetary penalty within their jurisdiction on an annual basis every January 15.

The definition of civil monetary penalty in the 2015 Adjustment Act applies to the maximum civil penalties that FERC may impose under the Federal Power Act (FPA), the Natural Gas Act (NGA), the Natural Gas Policy Act of 1978 (NGPA), and the Interstate Commerce Act (ICA).

The 2015 Adjustment Act directs each federal agency to follow three steps to adjust for inflation the maximum civil monetary penalties assessable under its jurisdiction. First, an agency must determine the percentage by which the US Department of Labor’s Consumer Price Index for all-urban consumers (CPI-U) for October of the preceding year exceeds the CPI-U for the October of the year before that. FERC determined that the CPI-U for October 2022 exceeded the CPI-U for October 2021 by 7.745%. Second, an agency must multiply the CPI-U increase (i.e., 7.745%) by the applicable existing maximum civil monetary penalty, which provides the base penalty increase amount. Finally, the agency must round the base penalty increase amount to nearest dollar, and then add this rounded base penalty increase amount to the base penalty, which provides the new adjusted maximum civil monetary penalty.

Following these steps, FERC increased the following maximum civil monetary penalties:

Source of Penalty

Existing Maximum

Civil Monetary Penalty

New Adjusted Maximum

Civil Monetary Penalty

FPA § 316A

$1,388,496 per violation, per day

$1,496,035 per violation, per day

FPA § 31(c)

$25,075 per violation, per day

$27,017 per violation, per day

FPA § 315(a)

$3,275 per violation

$3,529 per violation

NGA § 22

$1,388,496 per violation, per day

$1,496,035 per violation, per day

NGPA § 504(b)(6)(A)(i)

$1,388,496 per violation, per day

$1,496,035 per violation, per day

ICA § 6(10)

$1,453 per offense and $73 per

day after the first day

$1,566 per offense and $78 per

day after the first day

ICA § 16(8)

$14,536 per violation, per day

$15,662 per violation, per day

ICA § 19a(k)

$1,453 per offense, per day

$1,566 per offense, per day

ICA § 20(7)(a)

$1,453 per offense, per day

$1,566 per offense, per day

Because the 2015 Adjustment Act requires agencies to issue final rules adjusting their maximum civil monetary penalties notwithstanding the requirements of the Administrative Procedure Act (APA), FERC did not undertake the notice and comment requirements of the APA prior to issuing its final rule. The final rule is effective as of January 12, 2023.