FERC Holds First Workshop on New Penalty Guidelines - Emphasis on Company Compliance Programs



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On April 7, 2010, the Federal Energy Regulatory Commission (FERC) held its first workshop on the new penalty guidelines that were issued in its March policy statement. The penalty guidelines are a further evolution of FERC' policies relating to the assessment and calculation of civil penalties since the passage of EPAct 2005, under which FERC obtained significant penalty authority - up to $1,000,000 per day, per violation -for violations of law or FERC regulations.

In its March policy statement, FERC adopted detailed guidelines and mechanics for penalty calculations for the purpose of offering greater fairness, consistency, and transparency to FERC?s enforcement program. Pursuant to the policy statement, base penalty levels increase or decrease depending upon various factors, including whether the violation was self-reported, the level of company cooperation, the existence of a company FERC compliance program, and senior-management-level support for compliance.
During its first workshop on compliance, FERC staff continued to emphasize the importance and need for robust compliance programs, strong senior management support in fostering a compliance culture within the company, company self-reporting, and cooperation and settlement with FERC when violations are discovered. FERC expects companies engaging in transactions subject to FERC jurisdiction, such as capacity release and price reporting, to have FERC compliance and employee training programs designed to prevent violations that are fully supported by the company's senior management. Having a FERC compliance and training program and demonstrated senior management support for compliance, which fosters a compliance culture, are key factors to mitigating potential penalty exposure for violations.

FERC intends to conduct two additional workshops during April in both Houston, Texas and San Francisco, California on the new penalty guidelines.

If you have any questions or if you would like further assistance in understanding how FERC regulations apply to your business or in developing FERC compliance and training programs, please contact us.


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