FERC Enforcement Report Reflects Slowest Year—Uptick Likely In 2021
The Annual Report on the Federal Energy Regulatory Commission’s ("FERC") enforcement activity in 2020 reflects historically low metrics, but Commissioner Richard Glick’s comments suggest increased activity in 2021.
On Thursday, November 19, 2020, FERC released the Office of Enforcement’s ("OE") fourteenth annual Report on Enforcement for FY2020 (the "Report"). The Report summarizes enforcement efforts undertaken by the Division of Investigations ("DOI"), Division of Audits and Accounting, and Division of Analytics and Surveillance ("DAS") during the last fiscal year.
Focusing on the key metrics of (i) number of settlements and enforcement actions (three, compared with seven in 2018); (ii) civil penalty and disgorgement amounts (under $1 million, compared with almost $150 million two years ago); and (iii) new investigations (six, compared with twenty-four in 2018), this was arguably the slowest year for OE since the Energy Policy Act of 2005 giving rise to FERC’s modern enforcement regime was passed. Other important metrics such as audits and surveillance inquiries were roughly on par with the previous years, but the greatest risk energy companies face from OE is a DOI investigation—and that activity fell markedly. Some of this downturn may be explained by FERC’s response to COVID-19, but numerous other enforcement agencies (e.g., the Commodity Futures Trading Commission) did not see a similar decrease in activity.
During the November Open Meeting, Commissioner Glick was quick to criticize FERC, stating "I'm concerned that we have gone AWOL" on enforcement and that, based on the Report, "I think it's at least worth asking whether the Commission remains committed to its enforcement responsibilities. And I've had my doubts." Commissioner Glick’s comments may take on added significance as his name has been floated as a candidate for the next Chairman. Even if not as Chairman, Commissioner Glick, whose term expires in June 2022, is still expected to become more influential on enforcement matters when the new Commission takes shape in the coming year.
Further, notwithstanding the low number of new investigations, the Report reflects there are many pending investigations opened in prior years, noting that DAS worked with DOI on approximately fifty investigations. Many of these investigations likely involve allegations of market manipulation and will now be resolved by the new Commission.
