Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
In the latest round of proactive measures by the Federal Energy Regulatory Commission (FERC) to address the COVID-19 pandemic, Chairman Neil Chatterjee announced a series of steps to help utilities manage their enforcement and compliance-related burdens during this unprecedented time.[1] The announcement suggests FERC's recognition of the critical role that regulated entities are playing in the current environment, the compliance challenges that those entities may face in light of the unprecedented circumstances, and the potential burden of simultaneously trying to meet compliance and enforcement expectations that may have been put in place before the pandemic arose.
- First, the Chairman highlighted the use of prosecutorial discretion and stated that "[t]he Commission will not second-guess the good faith actions that regulated entities take in the face of this emergency." He specifically directed Enforcement staff to take the COVID-19 pandemic into account when evaluating compliance programs as part of its analyses under FERC's Penalty Guidelines, or as part of an audit for operations taking place during the emergency. Staff should also take the crisis into account in assessing the timeliness of self-reports, including the self-report credit under the Penalty Guidelines.
- Second, the Chairman "encourage[ed] regulated entities to take advantage of the open lines of informal communication with Enforcement staff [and] highlight[ed] two additional procedural options for obtaining more formal enforcement or compliance-related guidance—standards of conduct waivers and no-action letters." FERC's no-action letter process has been in place since 2005 but, unlike its Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) counterparts, it is rarely used to obtain guidance from staff.[2] To help facilitate that process, FERC updated its no-action letter website with additional information about the process and staff contact information. Chatterjee also confirmed that the pandemic qualifies as an emergency, triggering the suspension of certain standards of conduct posting requirements and provided guidance on when a utility should file a waiver request.
- Third, the Chairman announced measures to ease the burden on subjects of continuing non-public investigations and audits, and entities with continuing compliance obligations associated with completed enforcement cases. Specifically, he directed staff to (1) work with each entity to provide flexibility with discovery-related or other deadlines through July 31, 2020; (2) not begin any new audits until July 31, 2020; and (3) postpone new inquiries unless they require immediate attention because of a significant risk of harm. In addition, entities may delay for 60 days the submission of self-reports that involve inadvertent errors producing no significant harm to the markets, ratepayers, or other market participants.
Notwithstanding this relief and FERC's remote status, the Chairman made clear that Enforcement staff continues its surveillance efforts and screening processes. Thus, while the implied policy that during the COVID-19 pandemic Enforcement staff should accommodate utilities' new financial and operational burdens to provide needed relief, it should not be misperceived as a long-term relaxation of FERC's enforcement program. A greater reliance on waivers and no-action letters during the crisis, however, potentially might galvanize more regular and expeditious internal FERC processes for handling them that could make them more prevalent forms of relief beyond the crisis. In any event, FERC's announcement is a welcome response to the challenges regulated entities must meet during this stressful time.
Please contact Steptoe's FERC enforcement team with any questions about FERC's announcements, your company's plan of action as it relates to COVID-19, FERC's enforcement and compliance program, or any compliance or enforcement issues.
[1] FERC News Release, Coronavirus Update: FERC Acts to Help Regulated Entities Manage Compliance (April 2, 2020). At the same time, FERC issued (1) a Policy Statement providing regulatory guidance on energy infrastructure, market, reliability and security matters; (2) several orders granting various types of regulatory relief; and (3) a supplemental notice granting extensions of time for certain non-statutory deadlines, waiving regulations and shortening answer periods for motions for extensions of time due to the pandemic emergency. See FERC News Release, Coronavirus Update: FERC Acts to Prioritize Reliability, Provide Regulatory Relief (April 2, 2020). Additional information about FERC's response to the COVID-19 pandemic is available on its Coronavirus Response Page.
[2] See Interpretive Order Regarding No-Action Letter Process, 113 FERC ¶ 61,174 (2005).
