FERC Issues Revised Policy Statement for Penalty Guidelines

In the September 17^th Revised Policy Statement on Penalty Guidelines (“Revised Statement”), FERC made some significant changes to its guidelines as to how FERC will make determinations of civil penalties for violations of FERC statutes, rules and regulations.  However, FERC retained the overall approach and structure for its guidelines as proposed in FERC’s original March 18^th Policy Statement on Penalty Guidelines (“Policy Statement”).

The Revised Statement includes the following significant changes:

• With respect to reliability violations, the guidelines will not apply to FERC’s review of NERC’s Notices of Penalty.  It will apply to FERC’s Part 1b investigations initiated to investigate reliability violations.

• FERC reduced the base penalty for reliability violations, which are penalized as part of FERC’s Part 1b investigations, from 16 points to 6 points.  However, FERC increased the additional point values for risk of harm from reliability violations.

• FERC will not attempt to quantify monetary damages associated with the loss of load due to a violation of FERC statutes, rules or regulations.  Instead, FERC will review the amount of loss of load (MWH) when it considers the seriousness of the violation.

• FERC will give partial credit (which mitigates civil penalties) for an entity that has an effective compliance program, although its compliance program does not meet every requirement listed in the guidelines for an effective compliance program.

• FERC unbundled the credits (which mitigate civil penalties) for self-reports, cooperation, avoidance of trial-type hearings, and acceptance of responsibility.

• FERC established a scienter requirement by limiting violations for misrepresentations and false statements to instances of intentional acts or acts carried out with a reckless disregard for the truth.

FERC announced that the FERC Enforcement Staff will hold a technical conference in one year to discuss how the guidelines have worked in practice, to permit comments and questions from the industry, and to allow FERC to receive further input.  FERC Chairman Wellinghoff has stated that, at that time, FERC will be open to further adjustments to the guidelines.

The Revised Statement applies to all future violations and any pending investigation where FERC’s Enforcement Staff has not entered into settlement negotiations.

Bruder, Gentile & Marcoux, L.L.P. has prepared an 8-page summary of the Revised Policy Statement.  Also, there is an additional 3-page appendix to the summary which includes a step-by-step description of FERC’s methodology for calculating civil penalties, as modified by the Revised Statement.  Please contact Toni Frost if you would like to receive a copy of this summary.

To access the Revised Policy Statement, please click here.

For more information, please contact Toni Frost at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 202-296-1500.