On January 25, 2018, as amended on January 31, 2018, FERC Office of Enforcement Staff (“OE Staff”) answered BP America Inc., BP Corporation North America Inc., BP America Production Company, and BP Energy Company’s (collectively, “BP”) arguments that FERC must dismiss its order assessing civil penalties and disgorgement against BP for violating FERC’s anti-market manipulation rule due to the five-year statute of limitations for civil penalties.  Among other things, OE Staff argued that (1) enforcement actions under the Natural Gas Act (“NGA”) are distinct from the enforcement process under the Federal Power Act (“FPA”), and thus similar federal district court precedent in the FPA context is inapplicable to BP; and (2) FERC’s issuance of disgorgement is more remedial than punitive and thus not subject to the statute of limitations.
Continue Reading FERC Enforcement Staff Argues Claims Against BP Are Not Time-Barred due to Differences Between NGA and FPA

On December 28, 2017, the U.S. District Court for the Eastern District of Virginia (“District Court”) held that Powhatan Energy Fund LLC, Dr. Houlian Chen, and two funds owned by Dr. Chen (collectively, “Respondents”) are entitled to a full civil trial in FERC’s action to enforce penalties against Respondents for allegedly manipulating electricity markets.  Notably, the District Court held that a plenary civil trial was required because Respondents elected to forego a formal hearing before a FERC Administrative Law Judge (“ALJ”).  In lieu of a hearing before a FERC ALJ, Respondents instead elected to have FERC assess penalties upon finding a violation occurred, based on the investigative record. Thus, according to the District Court, a proper administrative record was never developed and Respondents were never permitted an opportunity to conduct their own independent discovery.
Continue Reading Virginia District Court Orders Discovery in FERC Enforcement Case Against Powhatan

On December 11, 2017, BP America Inc., BP Corporation North America Inc., BP America Production Company, and BP Energy Company (collectively, “BP”) requested FERC to dismiss its July 11, 2016 order (“July 11 Order”) assessing civil penalties against BP and requiring BP to disgorge profits for violating FERC’s anti-market manipulation rule.  In doing so, BP argued that, due to recent federal court cases, the law had changed regarding the statute of limitations for actions imposing civil penalties and disgorgement.  Therefore, according to BP, FERC’s August 5, 2013 order to show cause issued to BP failed to commence a “proceeding” within the meaning of the statute of limitations for enforcing civil fines and penalties, and thus FERC’s assessment of civil penalties and disgorgement was time-barred.  Rather, BP argued that the statute of limitations began to run on November 25, 2008 at the latest, and thus FERC was required to commence a “proceeding” by November 25, 2013, but FERC did not commence a “proceeding” until May 15, 2014 at the earliest when it set the matter for hearing.
Continue Reading BP Argues FERC Must Dismiss Market Manipulation Claims due to Five-Year Statute of Limitations

On November 16, 2017, FERC issued a Notice of Proposed Rulemaking (“NOPR”) in which it proposed to approve two Reliability Standards—PRC-027-1 (Coordination of Protection Systems for Performance During Faults) and PER-006-1 (Specific Training for Personnel)—that the North American Electric Reliability Corporation (“NERC”) submitted in a petition on September 2, 2016, and which are intended to replace currently-effective Reliability Standard PRC-001-1.1(ii) (System Protection Coordination).  FERC also proposed to direct NERC to modify PRC-027-1 to require an initial protection system coordination study to ensure that applicable entities will perform (or have performed), as a baseline, a study demonstrating proper coordination of their protection systems.  Lastly, FERC proposed in the NOPR to approve new and revised definitions to the NERC Glossary of Terms, the associated violation risk factors, violation severity levels, implementation plans, and effective dates for PRC-027-1 and PER-006-1, and the retirement of currently-effective PRC-001-1.1(ii).
Continue Reading FERC Proposes Approval of Two Reliability Standards

On November 7, 2017, FERC approved a settlement between FERC’s Office of Enforcement and Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, and Karen Levine (collectively with Barclays, “Defendants”) that resolves FERC’s claims that Defendants manipulated physical electricity markets.  Under the settlement, Barclays is required to pay $105 million in civil penalties and disgorgement, a big reduction compared to the $488 million FERC originally ordered.
Continue Reading FERC Approves $105 Million Settlement with Barclays for Market Manipulation

On October 25, 2017, FERC conditionally accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) December 16, 2016 proposed revisions to the MISO Tariff, which were designed to improve the efficiency of MISO’s process for charging interconnection customers for “Quarterly Operating Limit” studies.  FERC directed MISO to provide additional clarity in its proposed Tariff language and submit a compliance filing within thirty days.
Continue Reading FERC Accepts MISO Proposal on Interconnection Study Deposits

On September 19, 2017, the Senate Committee on Energy and Natural Resources (“ENR Committee”) unanimously advanced FERC nominees Kevin McIntyre and Richard Glick to a full vote on the Senate floor.  If confirmed by the Senate, Mr. McIntyre and Mr. Glick will join current FERC Commissioners Cheryl A. LaFleur, Robert F. Powelson, and Chairman Neil Chatterjee to fill all five seats at the Commission.  Upon confirmation, Mr. McIntyre will become the new Chairman of FERC.
Continue Reading Senate Energy and Natural Resources Committee Advances FERC Nominees for Confirmation

On September 7, 2017, the Senate Committee on Energy and Natural Resources (“Committee”) held a hearing to consider the nominations of Kevin McIntyre and Richard Glick—President Trump’s final nominees for FERC Commissioner.  Mr. McIntyre and Mr. Glick, who were joined by two nominees also being considered for Department of Interior positions, fielded questions from Committee members but largely avoided opining on matters currently pending at FERC.  Knowing that FERC only just recently reestablished the required quorum to resume regular business (see August 11, 2017 edition of the WER), Committee Chairman Sen. Lisa Murkowski (R-AK) stated that she was eager to advance the FERC nominees to the full Senate for confirmation.
Continue Reading Senate Committee on Energy and Natural Resources Holds Hearing to Consider FERC Nominees

On June 8, 2017, the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) dismissed Total Gas & Power N.A., Inc., Aaron Hall, and Therese Tran’s (collectively, “Total”) arguments that the Natural Gas Act (“NGA”) provides federal district courts – not FERC – with exclusive authority to adjudicate violations of the NGA and assess civil penalties, finding that Total’s claims were unripe because FERC neither has determined that Total has violated the NGA nor assessed any civil penalties.  The Fifth Circuit also dismissed Total’s arguments that FERC’s procedures for appointing Administrative Law Judges (“ALJs”) and conducting hearings are unconstitutional. 
Continue Reading Fifth Circuit Dismisses Total’s Arguments Against FERC’s NGA Enforcement Authority as Unripe

On June 5, 2017, the U.S. Supreme Court (“Supreme Court”) held that 28 U.S.C. § 2462’s (“Section 2462”) five-year limitations period for the enforcement of penalties applies to claims for disgorgement brought by the U.S. Securities and Exchange Commission (“SEC”).  As a result, additional federal agencies, including FERC, may similarly be limited to seeking disgorgement within five years of the date the claim accrued.
Continue Reading Supreme Court Ruling in SEC Case Could Affect FERC Enforcement Proceedings Involving Disgorgement