What is FERC? We are talking about government in this post, so FERC is an acronym for a federal government entity known as the Federal Energy Regulatory Commission (“FERC” or “Commission”). This entity was formed in 1977 to protect the interests of public and energy customers in the United States. FERC is an independent agency and falls under the umbrella of the Department of Energy.
The FERC Regulations follow the agency’s mission to ensure that regulated energy corporate entities adhere to the mandates of federal law. An example of a mandate is the proper transmission of interstate electricity, natural gas, and oil. The Commission’s regulations are found under Title 18 Chapter I of the Code of Federal Regulations (“CFR”).
In order to successfully regulate transmission, the FERC regulations require the following:
(a) It shall be unlawful for any entity, directly or indirectly, in connection with the purchase or sale of natural gas or the purchase or sale of transportation services subject to the jurisdiction of the Commission,
(1) To use or employ any device, scheme, or artifice to defraud,
(2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(3) To engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any entity.
(b) Nothing in this section shall be construed to create a private right of action.
CFR Chapter I Title 18: Conservation of Power and Water Resources §1c.1, “Prohibition of natural gas market manipulation.”
This broad statement, obviously, covers acts of fraud. To over-state the obvious, it is never a good idea to defraud the government. However, the fact that this section of the FERC regulations makes fraud specifically illegal gives citizens a good idea of what the agency’s intention was.
Besides promulgated FERC regulations, the Commission also uses and issues formal Orders, which have the effect of regulation. Orders are issued as a result of the FERC’s review of a particular matter, where the agency holds hearings and follows rules of practice and procedure.
Besides regulating interstate transmission, FERC also handles review of certain power proposals. These proposals include the construction of liquefied natural gas (LNG) terminals and the licensing of hydropower projects.
The Energy Policy Act
In 2005, the federal Energy Policy Act gave the Commission additional responsibilities. As a result, the FERC regulations were amended so that the agency now also regulates these areas, among others:
- transmission and wholesale sales of electricity in commerce moving in and out of the several states;
- mergers and acquisitions, and corporate transactions by electricity companies;
- oil transport by pipeline in commerce moving in and out of the several states;
- siting and abandonment of interstate natural gas pipelines and storage facilities;
- hydroelectric projects, and;
- energy markets.
From an environmental perspective, the FERC regulations also cover the enforcement of their various regulatory requirements through assessment of civil penalties. This is an important tool, I think. In my experience, the ability to levy a penalty is sometimes the only manner in which to force compliance.
The attorneys at Desautel Law are accustomed to the FERC Regulations. We review and advise clients on matters regulated by FERC and can help you with your project. Call us today to find out more: 401.477.0023.