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FERC Updates Guidance on Enforcement Process, Policies Tied to Resolution of Investigation Settlements  

The Federal Energy Regulatory Commission on Feb. 15 issued a policy statement to provide updated guidance as to its enforcement process and policies concerning resolution by settlement of investigations.

“Based on our experience over the past 15 years operating pursuant to our existing settlement process as originally adopted in 2008, consideration of other federal enforcement program settlement processes, and related industry feedback, we have determined that the Commission’s existing settlement process would benefit from certain enhancements,” FERC said.

“Specifically, and in recognition of the important role that settlements play in enforcement,” the reforms are designed to streamline the settlement process, to ensure that both the Commission and subjects of Commission investigations can resolve investigations efficiently, FERC said.

FERC is replacing the Commission’s existing process whereby Office of Enforcement staff must seek settlement authority from the Commission prior to engaging in settlement negotiations with the subject of an investigation, with a process where the Director of Enforcement has the discretion to authorize Enforcement staff to engage in such negotiations. 

Under this new process, formal settlement authority, with settlement terms pre-reviewed by the Commission, will not be a necessary precondition to the initiation of settlement negotiations. 

Instead, with the Director of Enforcement’s authorization, Enforcement staff will engage in negotiations with the subject of an investigation and, if and when Enforcement staff receives a viable settlement offer from the subject, it will negotiate the applicable terms and thereafter present the written Offer of Settlement to the Commission for formal voting. 

“Importantly, while the new process grants Enforcement staff new discretion to commence and engage in settlement negotiations, it does not change the fact that it is the Commission that ultimately determines whether a settlement of an investigation is in the public interest and should be approved,” FERC said.

FERC Chairman Willie Phillips noted that in this proceeding, FERC is issuing a policy statement to modernize and streamline its process for resolving enforcement investigations by settlement.

“Settlements play an important role in the Commission’s enforcement responsibilities, which include ensuring that jurisdictional markets remain free from fraud, manipulation and anti-competitive conduct,” he said.

“Settlements serve the public interest by ensuring that compliance problems are remedied faster and disgorged profits are returned to harmed market participants and customers more quickly,” he said.

“The reforms adopted today to the Commission’s settlement process enhance both enforcement staff’s and investigative subject’s ability to negotiate settlements and speed up the time it takes to reach resolution by settlement,” he said.

Under the policy statement, FERC’s Office of Enforcement “will no longer need to seek settlement authority from the Commission prior to engaging in settlement negotiations. Rather, the Director of Enforcement will have the discretion to authorize staff to begin such negotiations.

“The Commission will still determine whether any proposed settlement is in the public interest,” but eliminating the need to seek FERC approval to hold settlement discussions “will improve efficiency and eliminate unnecessary delays in resolving enforcement matters,” said FERC Commissioner Allison Clements.

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