Procedures for Disposition of Contested Audit Matters, 29779-29785 [06-4814]
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Federal Register / Vol. 71, No. 100 / Wednesday, May 24, 2006 / Rules and Regulations
workdays following disease
confirmation. Subsequent disposition of
the ruminants must occur under the
direct oversight of APHIS
representatives.
(vi) Recordkeeping.
(A) The operator must maintain a
current daily log, to record the entry and
exit of all persons entering and leaving
the facility.
(B) The operator must retain the daily
log, along with any logs kept by APHIS
and deposited with the operator, for at
least 2 years following the date of
release of the ruminants from
quarantine and must make such logs
available to APHIS representatives upon
request.
(5) Environmental quality. If APHIS
determines that a privately owned
medium or minimum security
quarantine facility does not meet
applicable local, State, or Federal
environmental regulations, APHIS may
deny or suspend approval of the facility
until appropriate remedial measures
have been applied.
(6) Other laws. A privately owned
medium or minimum security
quarantine facility must comply with
other applicable Federal laws and
regulations, as well as with all
applicable State and local codes and
regulations.
(7) Variances. The Administrator may
grant variances to existing requirements
relating to location, construction, and
other design features of a privately
owned medium security quarantine
facility or minimum security quarantine
facility as well as to sanitation, security,
operating procedures, recordkeeping,
and other provisions in paragraph (d) of
this section, but only if the
Administrator determines that the
variance causes no detrimental impact
to the health of the ruminants or to the
overall biological security of the
quarantine operations. The operator
must submit a request for a variance to
the Administrator in writing at least 30
days in advance of the arrival of the
ruminants to the facility. Any variance
also must be expressly provided for in
the compliance agreement.
(Approved by the Office of Management
and Budget under control number 0579–
0232)
7. Section 93.413 is revised to read as
follows:
I
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§ 93.413 Quarantine stations, visiting
restricted; sales prohibited.
Visitors are not permitted in the
quarantine enclosures during any time
that ruminants are in quarantine unless
the APHIS representative or inspector in
charge specifically grants access under
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29779
such conditions and restrictions as may
be imposed by the APHIS representative
or inspector in charge. An importer (or
his or her accredited agent or
veterinarian) may be admitted to the
yards and buildings containing his or
her quarantined ruminants at such
intervals as may be deemed necessary,
and under such conditions and
restrictions as may be imposed, by the
APHIS representative or the inspector in
charge of the quarantine facility or
station. On the last day of the
quarantine period, owners, officers, or
registry societies, and others having
official business or whose services may
be necessary in the removal of the
ruminants may be admitted upon
written permission from the APHIS
representative or inspector in charge. No
exhibition or sale shall be allowed
within the quarantine grounds.
SUMMARY: In this Final Rule, the Federal
Energy Regulatory Commission
(Commission) is amending its
regulations to expand due process for
certain audited persons who dispute
findings or proposed remedies
contained in draft audit reports.
DATES: Effective Date: This Final Rule
will become effective June 23, 2006.
FOR FURTHER INFORMATION CONTACT: John
R. Kroeger, Office of Enforcement,
Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC
20426. (202) 502–8177.
John.Kroeger@ferc.gov.
SUPPLEMENTARY INFORMATION:
§ 93.414
Order No. 675–A
[Amended]
8. In § 93.414, the first sentence is
amended by adding the words ‘‘APHIS
representative or’’ immediately before
the words ‘‘inspector in charge’’.
I 9. In the undesignated center heading
‘‘Mexico’’ before § 93.424, redesignate
footnote 9 as footnote 10.
I 10. In the undesignated center
heading ‘‘Central America and West
Indies’’ before § 93.422, redesignate
footnote 8 as footnote 9.
I 11. In the undesignated center
heading ‘‘Canada’’ before § 93.417,
redesignate footnote 7 as footnote 8.
Final rule, order on rehearing
and clarification.
ACTION:
Before Commissioners: Joseph T. Kelliher,
Chairman; Nora Mead Brownell, and
Suedeen G. Kelly.
I
Order on Rehearing and Clarification
§ 93.434
I. Introduction
1. On February 17, 2006, the
Commission issued a Final Rule, Order
No. 675,1 that expands the procedural
rights of persons subject to all audits
conducted by the Commission staff
under the Federal Power Act (FPA),2 the
Natural Gas Act (NGA),3 the Natural Gas
Policy Act (NGPA),4 and the Interstate
Commerce Act (ICA),5 except for audits
pertaining to reliability that the
Commission authorized in Order No.
672.6 Prior to the effective date of Order
No. 675, audited persons who disagreed
with non-financial audit matters
approved by the Commission were
required to seek rehearing of that order
to obtain further Commission review.
2. Pursuant to Order No. 675, audited
persons may seek Commission review of
disputed matters contained in an audit
report or similar document in a
procedure that provides additional due
process to audited persons subject to
non-financial audits. Under this
procedure, audited persons may provide
in writing to the audit staff a response
to a draft notice of deficiency, draft
audit report or similar document
[Removed and Reserved]
12. Section 93.434 is removed and
reserved.
I
Done in Washington, DC, this 19th day of
May 2006.
W. Ron DeHaven,
Administrator, Animal and Plant Health
Inspection Service.
[FR Doc. 06–4811 Filed 5–23–06; 8:45 am]
BILLING CODE 3410–34–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Parts 41, 158, 286 and 349
[Docket No. RM06–2–001; Order No. 675–
A]
Procedures for Disposition of
Contested Audit Matters
Issued May 18, 2006.
Federal Energy Regulatory
Commission; DOE.
AGENCY:
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1 Procedures for Disposition of Contested Audit
Matters, Order No. 675, 71 FR 9698 (Feb. 27, 2006),
III FERC Stats. & Regs. ¶ 31,209 (Feb. 17, 2006).
2 16 U.S.C. 791a, et seq. (2000).
3 15 U.S.C. 717, et seq. (2000).
4 15 U.S.C. 3301, et seq. (2000).
5 49 U.S.C. App. 1, et seq. (2000).
6 Rules Concerning Certification of the Electric
Reliability Organization; and Procedures for the
Establishment, Approval, and Enforcement of
Electric Reliability Standards, 71 FR 8662 (Feb. 17,
2006), III FERC Stats. & Regs. ¶ 31,204 (Feb. 2,
2006); reh’g granted in part and denied in part,
Order No. 672–A, 71 FR 19814 (Apr. 18, 2006), 114
FERC ¶ 61,328 (Mar. 30, 2006).
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(collectively, draft audit report)
indicating any and all findings or
proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audit staff
communicates this response to the
Commission along with the draft audit
report. The Commission may make
determinations on the merits in a public
order with respect to the findings and
proposed remedies contained in the
draft audit report that are not in dispute.
The Commission will publicly notice
the disputed items and provide the
audited person the opportunity to elect
in writing a shortened procedure, which
consists of a submission of memoranda,
or a trial-type hearing, by a date certain.
The audited person may timely respond
to the notice in a public filing by
electing in writing the shortened
procedure or the trial-type hearing.
3. The Commission will honor the
audited person’s timely election (unless
a trial-type hearing is chosen and there
are in the Commission’s judgment no
disputed issues of material fact
requiring a trial-type hearing) and issue
a public notice setting the schedule for
submission of memoranda, in the case
of the shortened procedure, or referring
the matter to the Chief Administrative
Law Judge, in the case of the trial-type
hearing.
4. On March 20, 2006, Edison Electric
Institute (EEI) timely filed the only
request for rehearing and clarification of
Order No. 675.7 The Commission grants
the request for rehearing and
clarification filed by EEI in four
respects. First, the Commission grants
EEI’s request for clarification regarding
the scope of contested audit matters.
Second, the Commission grants EEI’s
request for clarification that contested
audit procedures will not be used to
amend Final Rules. Third, the
Commission grants EEI’s request for
clarification by specifying that an
audited person shall have at least 15
days to provide in writing to the audit
staff a response to the draft audit report
indicating findings or proposed
remedies with which it disagrees.
Fourth, the Commission grants the
substance of EEI’s proposal to change
the regulatory text regarding the time
within which an audited person must
elect either the shortened procedure or
a trial-type hearing. In all other respects,
as explained below, the Commission
denies EEI’s request for rehearing and
clarification.
7 See
16 U.S.C. 825l(a) (2000).
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II. Discussion
A. Scope of Contested Audit Matters
5. In Order No. 675, the Commission
stated that entities other than the
audited person and the audit staff may
participate in the shortened procedure
or the trial-type hearing.8 The
Commission explained that an entity
other than the audited person may have
an interest in the outcome of the
contested audit proceeding and may
have information about the audited
person’s operations or proposed remedy
that would inform the Commission’s
determination regarding the contested
issue.9
1. Request for Rehearing or Clarification
6. EEI requests clarification, or in the
alternative, rehearing, that the Final
Rule is not intended to allow
intervenors to raise new issues in
response to a public notice of a
contested audit report.10 EEI expresses
concern that intervenors may seek to
intervene in a contested audit
proceeding and raise issues that are
beyond the scope of contested issues
raised by the audited person. EEI asserts
that allowing intervenors to expand the
scope of audit proceedings in such a
manner would tend to dilute the due
process rights afforded by Order No.
675.11 To address this concern, EEI
urges that the Final Rule should be
clarified to permit intervenors only to
raise arguments or facts that directly
relate to a finding or remedy already at
issue in the contested audit proceeding.
EEI contends that, under the FPA and
consistent with due process norms, new
issues must be raised in a section 206
complaint 12 filed by the interested
entity.13
8 Order
No. 675 at P 11, 38.
No. 675 at P 11.
10 EEI Request for Rehearing and Clarification at
p. 6.
11 EEI Request for Rehearing and Clarification at
pp. 5–7.
12 See 16 U.S.C. 824e (2000).
13 In support of its argument, EEI cites Public
Service Commission of N.Y. v. FERC, 642 F.2d
1335, 1345 (DC Cir. 1980), for the proposition that
section 4(e) of the NGA ‘‘cannot be used by the
Commission to institute any change in a ratemaking
component * * * that does not represent at least
partial approval of the change for which the
enterprise had petitioned in its filing. If the
Commission seeks to make such changes, it has no
alternative save compliance with the strictures of
section 5(a).’’ EEI also cites Public Service
Commission of Kentucky v. FERC, 397 F.3d 1004,
1012 (DC Cir. 2005), for the proposition that ‘‘[t]he
Due Process Clause and the [Administrative
Procedure Act] require that an agency setting a
matter for hearing provide parties ‘with adequate
notice of the issues that would be considered, and
ultimately resolved, at that hearing.’’’
9 Order
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2. Commission Determination
7. The Commission grants EEI’s
request for clarification. An interested
entity that has successfully intervened
in a proceeding will be limited to
arguments or facts that directly relate to
a finding or proposed remedy already at
issue in the contested audit proceeding
that the audited person has
appropriately designated and that is
noted in the Commission’s initial order
concerning the audit report or similar
document.14 Permitting an intervenor to
raise extraneous issues could deflect the
focus of the contested proceeding from
the designated issue or issues, could
cause unnecessary expense, litigation
and delay, and could require an audited
person to litigate issues of which it had
no notice at the time it made its election
to challenge a finding or proposed
remedy in the audit report.
B. Orders in Contested Audit
Proceedings
1. Request for Rehearing or Clarification
8. EEI requests that the Commission
clarify that it does not intend the Final
Rule’s language regarding the
precedential effect of contested audit
orders to create or support the ability to
amend, by individual adjudication,
rules adopted through rulemaking
proceedings.15 EEI contends that such a
result would be contrary to law. EEI
asserts that courts have struck down
agencies’ attempts to use clarification
and interpretations as a way of imposing
more stringent requirements and setting
higher standards on the regulated
community.16 EEI also asserts that
courts have rejected agencies’ efforts to
enforce new policies by gradually
imposing more restrictive standards and
higher burdens without allowing the
regulated community to participate or
object.17
2. Commission Determination
9. The Commission grants EEI’s
request for clarification. Orders that the
14 This limitation is consistent with Commission
practice. For example, the Commission has rejected
the timely-filed or otherwise accepted pleadings of
intervenors where they addressed issues that were
not relevant to the Commission’s disposition of a
seller’s market-based rates application and where
they related to issues that were otherwise outside
the scope of the proceeding. See H.Q. Energy
Services (U.S.) Inc., 81 FERC ¶ 61,184 at 61,809 n.5
(1997).
15 EEI Request for Rehearing and Clarification at
p. 9.
16 To support this position, EEI cites Alaska
Professional Hunters Ass’n v. FAA, 177 F.3d 1030,
1034 (DC Cir. 1999) (Alaska Professional Hunters
Ass’n).
17 To support this position, EEI cites Appalachian
Power Co. v. EPA, 208 F.3d 1015, 1024 (DC Cir.
2000) (Appalachian Power).
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Commission issues in contested audit
proceedings will not amend rules
adopted through rulemaking
proceedings.
C. Clarification of Time Frames for
Audited Person To Respond
1. Request for Rehearing and
Clarification
10. EEI states that if the Commission
intended to require a 30-day time frame
in which the audited person must
provide in writing to the audit staff a
response to the draft audit report noting
the items with which it disagrees, then
EEI seeks rehearing of that
determination. EEI states that the time
frame in which the audited person must
provide in writing to the audit staff a
response to the draft audit report
indicating items with which it disagrees
should be flexible and that it should be
determined by the Commission audit
staff and the audited person based on
the facts of the audit. EEI also asks the
Commission to clarify the regulatory
text to make it clear that after the public
issuance of the Commission’s initial
order concerning an audit report, the
audited person will have 30 days to
respond to the Commission with the
selection of a shortened procedure or a
trial-type proceeding.18
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2. Commission Determination
11. The Commission grants EEI’s
request for clarification in part. In Order
No. 675, the Commission did not
specify a time frame in which the
audited person must provide in writing
to the audit staff a response to the draft
audit report noting the items with
which it disagrees. Instead, the
pertinent regulation stated that the
audited person’s written response must
be ‘‘timely.’’ The Commission intended
that the audit staff would determine the
length of time an audited person would
have to file a written response
indicating the findings or proposed
remedies with which it disagrees. The
relevant regulatory text at §§ 41.1, 158.1,
286.103 and 349.1 reads as follows:
Where such findings, with or without
proposed remedies, appear in a notice of
deficiency, audit report or similar document,
such document shall be provided to the
audited person, and the finding or findings,
and any proposed remedies, shall be noted
and explained. The audited person shall
timely indicate in a written response any and
all findings or proposed remedies, or both, in
any combination, with which the audited
person disagrees. Any initial order that the
Commission subsequently may issue with
respect to the notice of deficiency, audit
report or similar document shall note, but not
18 EEI Request for Rehearing and Clarification at
pp. 10–11.
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address on the merits, the finding or findings,
or the proposed remedy or remedies, or both,
in any combination, with which the audited
person disagreed. The Commission shall
provide the audited person 30 days to
respond with respect to the finding or
findings or any proposed remedies, or both,
in any combination, with which it disagreed.
12. The Commission declines to adopt
EEI’s suggestion that both the audited
person and the audit staff determine the
time period in which the audited person
shall provide a written response to the
audit staff indicating findings or
proposed remedies with which the
audited person disagrees. If the time
period for the audited person’s
submission of this response were
subject to agreement between the
audited person and the audit staff, there
might be instances in which the audited
person and the audit staff would fail to
agree, resulting in inappropriate delay.
The Commission recognizes, however,
that a certain time period for the audited
person to provide a written response
indicating findings and proposed
remedies with which it disagrees, with
the possibility for additional time if
deemed necessary by the Commission,
would provide a measure of assurance
to the audited person that it will have
sufficient time to make this written
response to audit staff. The Commission
determines that 15 days to make this
written response will be sufficient time
in the large majority of cases in which
the audited person and audit staff do
not disagree regarding the contents of
the draft audit report. Even in the
remaining instances in which the
audited person and the audit staff
disagree regarding the contents of the
draft audit report, the discussion
between them regarding the contents of
the draft audit report preceding the
commencement of the 15-day period
should render the allotted time
sufficient for the audited person to
indicate the areas of disagreement. In
instances in which the audited person
may require more than 15 days to
provide a written statement of findings
or proposed remedies with which it
disagrees to audit staff, the audit staff
may provide in writing to the audited
person additional time at the time the
draft audit report is sent. The audited
person may also move the Commission
for additional time. Consequently, the
Commission will add two sentences to
follow the second sentence of §§ 41.1,
158.1, 286.103, and 349.1 quoted above
to read as follows: ‘‘The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit
report or similar document to provide a
written response to the audit staff
indicating any and all findings or
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29781
proposed remedies, or both, in any
combination, with which the audited
person disagrees, and such further time
as the audit staff may provide in writing
to the audited person at the time the
document is sent to the audited person.
The audited person may move the
Commission for additional time to
provide a written response to the audit
staff and such motion shall be granted
for good cause shown.’’
13. In Order No. 675, the Commission
intended to indicate that an audited
person shall have 30 days to respond to
a Commission order with a selection of
a shortened procedure or a trial-type
proceeding.19 The 30-day provision in
the last sentence quoted in paragraph 11
above is meant to convey this intention.
To remove any possible ambiguity, the
Commission will amend the last
sentence of §§ 41.1, 158.1, 286.103, and
349.1 quoted above, to read as follows:
‘‘The Commission shall provide the
audited person 30 days to respond to
the initial Commission order concerning
a notice of deficiency, audit report or
similar document with respect to the
finding or findings or any proposed
remedy or remedies, or both, in any
combination, with which it disagreed.’’
D. Precedential Effect of Decisions in
Contested Audit Matters
14. In Order No. 675, the Commission
stated that a Commission order that
resolves a contested audit matter would
be precedent for non-parties. The
Commission explained that an audited
person who challenges a finding or
proposed remedy in an audit report
using the procedure in the Final Rule is
participating in a contested, on-therecord proceeding, and, like any other
such proceeding before the Commission,
the legal reasoning and conclusions of
the resulting order would apply to nonparties.20
1. Request for Clarification
15. EEI requests clarification that the
Commission will not apply any ruling
on a contested audit matter to an entity
that was not a party to the adjudication
unless and until the non-party entity
has been afforded an opportunity to
challenge the basis of the ruling as it
applies to that entity. EEI states that the
language in the Final Rule regarding the
precedential value of the Commission’s
rulings on a contested audit may not be
clear. According to EEI, judicial
precedent clearly supports its position.
EEI relies principally upon Florida Gas
Transmission Co. v. FERC, 876 F.2d 42,
44 (5th Cir. 1989) (FGT). In that case, the
19 Order
20 Order
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No. 675 at P 24–25.
No. 675 at P 32.
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United States Court of Appeals for the
Fifth Circuit held that the Commission
did not sufficiently substantiate its
decision to grant individual NGA
section 7(c) certificates for interruptible
service for a one-year term instead of the
multi-year terms requested by FGT. The
Commission had relied on a policy of
granting one-year terms for such
certificates. The court stated that due
process
guarantees that parties who will be affected
by the general rule be given an opportunity
to challenge the agency’s action. When the
rule is established through formal
rulemaking, public notice and hearing
provide the necessary protection. But where,
as here, the rule is established in individual
adjudications, due process requires that
affected parties be allowed to challenge the
basis of the rule. FERC must be able to
substantiate the general rule.21
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2. Commission Determination
16. The Commission denies EEI’s
request for clarification. The
Commission plainly stated in the Final
Rule that a Commission order that
resolves a contested matter has
precedential effect.22 As the
Commission noted in Order No. 675,
‘‘the choice made between proceeding
by general rule or by individual, ad hoc
litigation is one that lies primarily in the
informed discretion of the
administrative agency.’’ 23 The longsettled principle of Federal
administrative law is that ‘‘[a]bsent
express congressional direction to the
contrary, agencies are free to choose
their procedural mode of
administration.’’ 24
17. FGT does not require a different
conclusion. The issue in that case was
whether the Commission could rely
upon its one-year policy for denying
requests for longer term individual
certificates or whether the Commission
needed to provide an explanation
specific to FGT’s circumstances and
failed to do so. On remand, the
Commission gave an explanation 25 that
the court subsequently concluded was
sufficient.26 To the extent that the
Commission makes a determination in a
contested audit matter and subsequently
applies that determination to an audited
21 FGT, 876 F.2d at 44 (citations omitted). EEI also
cites PPL Wallingford Energy LLC v. FERC, 419 F.3d
1194 (DC Cir. 2005). In that case, the court vacated
orders of the Commission on the grounds that the
Commission did not directly respond to or address
arguments the petitioner in that proceeding had
made before the Commission.
22 Order No. 675 at P 32.
23 SEC v. Chenery Corp., 332 U.S. 194, 203 (1947).
24 Davis v. EPA, 336 F.3d 965 (9th Cir. 2003).
25 Florida Gas Transmission Co., 49 FERC
¶ 61,375 (1989).
26 Monsanto Co. v. FERC, 963 F.2d 827 (5th Cir.
1992).
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person who had not been a party in the
prior proceeding, the Commission will
provide a reasoned explanation to
comply with applicable legal standards.
18. In sum, just like other
Commission contested, on-the-record
proceedings that provide third parties
an opportunity to intervene and
participate, we find that Commission
determinations in contested audit
proceedings are precedent for nonparties in subsequent proceedings. And,
as in such proceedings, the Commission
will explain the application of that
precedent on the basis of the record
developed in subsequent proceedings.
E. Codifying the Determination in the
Preamble of the Final Rule
1. EEI’s Request for Rehearing and
Clarification
19. EEI asks that the Commission
include a number of its determinations
contained in the Final Rule in the
regulatory text. EEI states that the types
of matters addressed in the Final Rule
that were not included in the regulatory
text have been included in the
Commission’s regulations on other
occasions. As an example, EEI cites
§ 1b.16 of the Commission’s
regulations,27 which pertains, in part, to
the right of a person who is compelled
to appear, or who appears in person at
the request or permission of the
Investigating Officer, to be
accompanied, represented and advised
by counsel, subject to certain additional
provisions. EEI notes in this regard that
in the Final Rule, the Commission
stated that an attorney may be present
during interviews of an audited person’s
employees. EEI contends that a person
should not have to refer to the language
of the Final Rule, but instead should be
able to consult the Commission’s
regulations, to learn this information.28
20. EEI identifies seven matters that it
states are discussed in the Final Rule
but not reflected in the regulatory text.
These matters are (1) The right to have
counsel present during an audit; (2) use
by the Commission of the standard set
forth in § 385.214(b) of its regulations 29
to govern interventions in contested
audit proceedings and the
disallowances of interested persons to
intervene until after the Commission
issues the notice described in Part 41 of
the Commission’s regulations; (3)
confidential treatment of information
provided in an audit; (4) the absence of
discovery in the shortened procedure
and the applicability of Part 385 of the
27 18
CFR 1b.16 (2005).
Request for Rehearing and Clarification at
pp. 11–14.
29 18 CFR 85.214(b) (2005).
28 EEI
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Commission’s regulations 30 with
respect to discovery in a trial-type
proceeding; (5) the precedential value of
an audit report and an order approving
an uncontested audit report; (6) the 30day time frame for an audited person’s
response; 31 and (7) protection of
confidential treatment in trial-type
proceedings.
2. Commission Determination
21. EEI has not provided a compelling
reason for the Commission to include
the noted portions of the Final Rule in
the regulatory text. In particular, four of
the issues EEI raises are not germane to
the procedural matters addressed in the
regulatory text. The right to counsel,
confidential treatment, precedential
value of an audit report and a
Commission order approving an
uncontested audit report, and protection
of confidential treatment issues do not
pertain to the procedure an audited
person may use to challenge findings or
proposed remedies in an audit report.
Accordingly, it would not be
appropriate to include them in the
regulatory text of the parts of Title 18
involved in this rulemaking. The
Commission has exercised its discretion
in past proceedings to clarify matters in
final rules and in orders on rehearing of
final rules without inserting those
clarifications in the underlying
regulations.32
22. The Commission’s statements in
the Final Rule regarding interventions
likewise do not warrant inclusion in the
regulatory text. The Commission stated
that it will use the standard stated in
§ 385.214(b),33 which is in subpart B of
Part 385 of the Commission’s
regulations, for permitting interested
30 18
CFR part 385 (2005).
request with respect to the 30-day time
frame for an audit person’s response is addressed
supra P 11–13.
32 See, e.g., Regulations Implementing Energy
Policy Act of 2005; Pre-filing Procedures for Review
of LNG Terminals and Other Natural Gas Facilities,
Order No. 665, 70 FR 60426 (Oct. 18, 2005), FERC
Stats. & Regs., Regulations Preambles 2001–2005
¶ 31,195 (Oct. 7, 2005) (‘‘In view of the clarification
and regulatory text revisions discussed above, the
Commission does not believe that it is necessary to
include in the final regulations additional criteria
or definitions for the Director’s use in reaching a
determination whether prospective modifications to
an existing or approved LNG terminal should be
subject to a mandatory pre-filing process.’’);
Standards of Conduct for Transmission Providers,
Order No. 2004–A, 69 FR 23562 (Apr. 29, 2004),
FERC Stats. & Regs., Regulations Preambles 2001–
2005 ¶ 31,161 (Apr. 16, 2004) (‘‘The Commission
denies National Fuel-Supply’s request to revise the
regulatory text, but clarifies that by using the term
‘relate’ in the phrase ‘if it relates solely to a
Marketing or Energy Affiliate’s specific request for
transmission service,’ the Commission intended to
include the corresponding transportation service
agreements that result from a ‘request.’ ’’).
33 18 CFR 385.214(b) (2005).
31 EEI’s
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entities to file memoranda in the
shortened procedure as it uses to permit
interventions in other proceedings.
Subpart B of Part 385 ‘‘applies to any
pleading’’ 34 and thus no addition to the
regulatory text is needed to provide
certainty.
23. The Commission’s statements in
the Final Rule regarding discovery also
do not warrant inclusion in the
regulatory text. The regulatory text
accompanying the Final Rule does not
authorize discovery in the shortened
procedure. The Final Rule clarified that
discovery is not available in the
shortened procedure at EEI’s request.35
Again, adding language in the regulatory
text will not provide certainty. As is
true for adding regulatory text regarding
interventions, adding regulatory text
regarding discovery in trial-type
proceedings would also be redundant,
in this case to the rules in Part 385 of
the Commission’s regulations.
24. The Commission does not agree
with EEI’s contention that a provision in
Part 1b of the Commission’s regulations,
which pertains to a person’s right to
have counsel present under certain
circumstances in an investigation,
suggests that the revised Part 41 should
also address issues relating to counsel,
in addition to other issues. Part 1b
contains provisions describing the
Commission’s policy and procedures for
investigations conducted under the
statutes it administers. 36 Part 41 does
not describe the audit process. Instead,
Part 41 sets forth the procedure an
audited person can use to challenge
audit findings or proposed remedies
with which it disagrees. In sum, by
declining to include in the regulatory
text the topics EEI references the
Commission is not acting in a manner
inconsistent with its promulgation of
Part 1b.
F. Separation of Functions Issues
1. Request for Rehearing and
Clarification
25. In its request for rehearing and
clarification, EEI asks the Commission
to issue a policy statement, with an
opportunity for public comment, to
consider and determine the appropriate
relationship between the Commission’s
audit and enforcement staffs during
audits, shortened or trial-type
procedures for contested audit matters,
and formal and informal investigations
wwhite on PROD1PC61 with RULES
34 18
CFR 385.201 (2005).
No. 675 at P 9, 12. The Final Rule also
clarified that the applicable standards under Part
385 of the Commission’s regulations will govern if
the trial-type procedure is used. Order No. 675 n.25.
36 Rules Relating to Investigations, Order No. 8,
43 FR 27174 (Jun. 23, 1978), FERC Stats. & Regs.,
Regulations Preambles 1977–1981 ¶ 30,012 (1978).
35 Order
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17:48 May 23, 2006
Jkt 208001
under Part 1b of the Commission’s
regulations. EEI asserts that the time is
ripe for such a policy statement because
of developments and changes in the
roles and functions of the audit and
enforcement staffs since the
Commission’s issuance of its Policy
Statement on Separation of Functions 37
in 2002 and the Commission’s new and
substantial enforcement and remedial
authority under the Energy Policy Act of
2005 (EPAct 2005).38 EEI states that the
purpose of the policy statement it
proposes would be for the Commission
to examine the relationship of the audit
and enforcement staffs to ensure that
their work is fair and consistent with
due process rights and separations of
functions during every possible stage of
the audit process and any subsequent
investigatory or enforcement action. EEI
states that a policy statement, with
opportunity for public comment, would
help build an appropriate Commission
record and basis for balancing
separation of functions and due process
requirements.39 Finally, EEI asserts that
a case the Commission cited in the Final
Rule, Trans Alaska Pipeline System, 9
FERC ¶ 61,205 (1979), which states that
the Commission’s audit and
investigatory staffs may freely share
information, is no longer fully
relevant.40
2. Commission Determination
26. The Commission declines EEI’s
proposal that the Commission issue a
policy statement concerning the
relationship of its audit and
investigations staffs. As an initial
matter, EEI’s proposal is not related to
the Commission’s promulgation of a
new procedure for audited persons
seeking to challenge audit findings or
proposed remedies, which is the subject
of Order No. 675. Moreover, the
Commission already has a policy
statement on Separations of
Functions,41 which is as applicable
today as it was when it was issued in
2002. Nothing in EPAct 2005 affects the
operation of Rule 2202,42 which was the
focus of that policy statement.
27. For its part, EEI’s request is not
supported by facts. EEI does not identify
any specific practice or activity that
warrants examination. EEI refers to
37 101
FERC ¶ 61,340 (2002).
No. 109–58, 119 Stat. 594 (2005).
Request for Rehearing and Clarification at
pp. 14–15. According to EEI, the Commission has
not established a sufficient basis and record with
respect to this issue to satisfy the reasoned decision
making standard under the Administrative
Procedure Act, 5 U.S.C. 706 (2000).
40 EEI Request for Rehearing and Clarification at
pp. 15–16.
41 101 FERC ¶ 61,340 (2002).
42 18 CFR 385.2202 (2005).
38 P.L.
39 EEI
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29783
developments and changes since 2002,
but does not state what material
developments and changes have
occurred that compel the public
examination of separation of functions
issues that EEI requests. EPAct 2005
provided the Commission with
enhanced authority to assess civil
penalties for violations of the FPA, NGA
and NGPA, but EEI does not suggest
why this authority should trigger the
policy statement it seeks.43
28. Trans Alaska Pipeline System
remains relevant to the issue of whether
the audit staff and investigative staff
may share information. In that
proceeding, the Trans Alaska Pipeline
System owners asked that the
Commission forbid communications
between the valuation and audit staff on
the one hand and the rate staff on the
other. The Commission determined,
among other things, that
communications between these two
staffs would not constitute
impermissible, ex parte
communications and that the staffs need
not be separated to ensure the integrity
of the valuation.44 The Commission
approvingly quoted from a prior
proceeding in which it endorsed the
sharing of information among different
staffs:
Administrative agencies were brought into
being to supply expertise and to minimize
formalism. Walls of separation between those
who litigate and those who investigate do not
serve those ends. Nor does due process
require them. All that due process mandates
in situations of this kind is that adjudicative
proceedings be decided solely on the basis of
the records developed in them.45
29. Efficiency and sound
administrative practice favors the
sharing of information between the
audit staff and investigative staff, and no
entity suffers a cognizable due process
harm as a result. We see no need at this
43 Since the enactment of EPAct 2005, the
Commission has issued a number of statements and
orders to provide guidance to the regulated
community. For example, in October 2005, the
Commission issued a Policy Statement on
Enforcement to provide guidance and regulatory
certainty regarding the Commission’s enforcement
of the statutes, orders, rules and regulations it
administers. Enforcement of Statutes, Orders, Rules,
and Regulations, 113 FERC ¶ 61,068 (2005). In
November 2005, the Commission issued an
Interpretive Order Regarding No-Action Letter
Process to clarify that members of the public may
request and obtain no-action letters with respect to
whether staff will recommend that the Commission
take no enforcement action with respect to specific
proposed transactions, practices or situations that
may raise issues under certain Commission
regulations. Informal Staff Advice on Regulatory
Requirements, 113 FERC ¶ 61,174 (2005).
44 Trans Alaska Pipeline System, 9 FERC at
61,371–372.
45 Id. at 61,372, quoting Tenneco, Inc., 7 FERC
¶ 61,258 at 61,541–542 (1979) (footnotes omitted).
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time to reevaluate the interaction
between these staffs.
The Commission orders: EEI’s petition
for rehearing and clarification is granted
in part and denied in part as discussed
in the body of this order.
By the Commission.
Magalie R. Salas,
Secretary.
List of Subjects
18 CFR Part 41
Administrative practice and
procedure, Electronic utilities,
Reporting and recordkeeping
requirements, Uniform System of
Accounts.
18 CFR Part 158
Administrative practice and
procedure, Natural gas, Reporting and
recordkeeping requirements.
18 CFR Parts 286 and 349
Administrative practice and
procedure, Natural gas, Price Controls.
I In consideration of the foregoing, the
Commission amends parts 41, 158, 286
and 349, Chapter I, Title 18 of the Code
of Federal Regulations, as follows:
PART 41—ACCOUNTS, RECORDS,
MEMORANDA AND DISPOSITION OF
CONTESTED AUDIT FINDINGS AND
PROPOSED REMEDIES
1. The authority citation for part 41
continues to read as follows:
I
Authority: 16 U.S.C. 791a–825r, 2601–
2645; 42 U.S.C. 7101–7352.
2. Section 41.1 is revised to read as
follows:
I
wwhite on PROD1PC61 with RULES
§ 41.1
Notice to audited person.
(a) Applicability. This part applies to
all audits conducted by the Commission
or its staff under authority of the Federal
Power Act except for Electric Reliability
Organization audits conducted pursuant
to the authority of part 39 of the
Commission’s regulations.
(b) Notice. An audit conducted by the
Commission’s staff under authority of
the Federal Power Act may result in a
notice of deficiency or audit report or
similar document containing a finding
or findings that the audited person has
not complied with a requirement of the
Commission with respect to, but not
limited to, the following: A filed tariff
or tariffs, contracts, data, records,
accounts, books, communications or
papers relevant to the audit of the
audited person; matters under the
Standards of Conduct or the Code of
Conduct; and the activities or operations
of the audited person. The notice of
deficiency, audit report or similar
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16:41 May 23, 2006
Jkt 208001
document may also contain one or more
proposed remedies that address findings
of noncompliance. Where such findings,
with or without proposed remedies,
appear in a notice of deficiency, audit
report or similar document, such
document shall be provided to the
audited person, and the finding or
findings, and any proposed remedies,
shall be noted and explained. The
audited person shall timely indicate in
a written response any and all findings
or proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit
report or similar document to provide a
written response to the audit staff
indicating any and all findings or
proposed remedies, or both, in any
combination, with which the audited
person disagrees, and such further time
as the audit staff may provide in writing
to the audited person at the time the
document is sent to the audited person.
The audited person may move the
Commission for additional time to
provide a written response to the audit
staff and such motion shall be granted
for good cause shown. Any initial order
that the Commission subsequently may
issue with respect to the notice of
deficiency, audit report or similar
document shall note, but not address on
the merits, the finding or findings, or
the proposed remedy or remedies, or
both, in any combination, with which
the audited person disagreed. The
Commission shall provide the audited
person 30 days to respond to the initial
Commission order concerning a notice
of deficiency, audit report or similar
document with respect to the finding or
findings or any proposed remedy or
remedies, or both, in any combination,
with which it disagreed.
PART 158—ACCOUNTS, RECORDS,
MEMORANDA AND DISPOSITION OF
CONTESTED AUDIT FINDINGS AND
PROPOSED REMEDIES
3. The authority citation for part 158
continues to read as follows:
I
Authority: 15 U.S.C. 717–717w, 3301–
3432; 42 U.S.C. 7102–7352.
4. Section 158.1 is revised to read as
follows:
I
§ 158.1
Notice to audited person.
An audit conducted by the
Commission’s staff under authority of
the Natural Gas Act may result in a
notice of deficiency or audit report or
similar document containing a finding
or findings that the audited person has
not complied with a requirement of the
PO 00000
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Fmt 4700
Sfmt 4700
Commission with respect to, but not
limited to, the following: A filed tariff
or tariffs, contracts, data, records,
accounts, books, communications or
papers relevant to the audit of the
audited person; matters under the
Standards of Conduct or the Code of
Conduct; and the activities or operations
of the audited person. The notice of
deficiency, audit report or similar
document may also contain one or more
proposed remedies that address findings
of noncompliance. Where such findings,
with or without proposed remedies,
appear in a notice of deficiency, audit
report or similar document, such
document shall be provided to the
audited person, and the finding or
findings, and any proposed remedies,
shall be noted and explained. The
audited person shall timely indicate in
a written response any and all findings
or proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit
report or similar document to provide a
written response to the audit staff
indicating any and all findings or
proposed remedies, or both, in any
combination, with which the audited
person disagrees, and such further time
as the audit staff may provide in writing
to the audited person at the time the
document is sent to the audited person.
The audited person may move the
Commission for additional time to
provide a written response to the audit
staff and such motion shall be granted
for good cause shown. Any initial order
that the Commission subsequently may
issue with respect to the notice of
deficiency, audit report or similar
document shall note, but not address on
the merits, the finding or findings, or
the proposed remedy or remedies, or
both, in any combination, with which
the audited person disagreed. The
Commission shall provide the audited
person 30 days to respond to the initial
Commission order concerning a notice
of deficiency, audit report or similar
document with respect to the finding or
findings or any proposed remedy or
remedies, or both, in any combination,
with which it disagreed.
PART 286—ACCOUNTS, RECORDS,
MEMORANDA AND DISPOSITION OF
CONTESTED AUDIT FINDINGS AND
PROPOSED REMEDIES
5. The authority citation for part 286
is revised to read as follows:
I
Authority: 5 U.S.C. 551 et seq.; 15 U.S.C.
717–717w, 3301–3432; 42 U.S.C. 7102–7352.
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Federal Register / Vol. 71, No. 100 / Wednesday, May 24, 2006 / Rules and Regulations
6. Section 286.103 is revised to read
as follows:
I
wwhite on PROD1PC61 with RULES
§ 286.103
PART 349—DISPOSITION OF
CONTESTED AUDIT FINDINGS AND
PROPOSED REMEDIES
Notice to audited person.
An audit conducted by the
Commission’s staff under authority of
the Natural Gas Policy Act may result in
a notice of deficiency or audit report or
similar document containing a finding
or findings that the audited person has
not complied with a requirement of the
Commission with respect to, but not
limited to, the following: A filed tariff
or tariffs, contracts, data, records,
accounts, books, communications or
papers relevant to the audit of the
audited person; matters under the
Standards of Conduct or the Code of
Conduct; and the activities or operations
of the audited person. The notice of
deficiency, audit report or similar
document may also contain one or more
proposed remedies that address findings
of noncompliance. Where such findings,
with or without proposed remedies,
appear in a notice of deficiency, audit
report or similar document, such
document shall be provided to the
audited person, and the finding or
findings, and any proposed remedies,
shall be noted and explained. The
audited person shall timely indicate in
a written response any and all findings
or proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit
report or similar document to provide a
written response to the audit staff
indicating any and all findings or
proposed remedies, or both, in any
combination, with which the audited
person disagrees, and such further time
as the audit staff may provide in writing
to the audited person at the time the
document is sent to the audited person.
The audited person may move the
Commission for additional time to
provide a written response to the audit
staff and such motion shall be granted
for good cause shown. Any initial order
that the Commission subsequently may
issue with respect to the notice of
deficiency, audit report or similar
document shall note, but not address on
the merits, the finding or findings, or
the proposed remedy or remedies, or
both, in any combination, with which
the audited person disagreed. The
Commission shall provide the audited
person 30 days to respond to the initial
Commission order concerning a notice
of deficiency, audit report or similar
document with respect to the finding or
findings or any proposed remedy or
remedies, or both, in any combination,
with which it disagreed.
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16:41 May 23, 2006
Jkt 208001
7. The authority citation for part 349
is revised to read as follows:
I
Authority: 42 U.S.C. 7101–7352; 49 U.S.C.
1, et seq.
8. Section 349.1 is revised to read as
follows:
I
§ 349.1
person 30 days to respond to the initial
Commission order concerning a notice
of deficiency, audit report or similar
document with respect to the finding or
findings or any proposed remedy or
remedies, or both, in any combination,
with which it disagreed.
[FR Doc. 06–4814 Filed 5–23–06; 8:45 am]
BILLING CODE 6717–01–P
Notice to audited person.
An audit conducted by the
Commission or its staff under authority
of the Interstate Commerce Act may
result in a notice of deficiency or audit
report or similar document containing a
finding or findings that the audited
person has not complied with a
requirement of the Commission with
respect to, but not limited to, the
following: A filed tariff or tariffs,
contracts, data, records, accounts,
books, communications or papers
relevant to the audit of the audited
person; and the activities or operations
of the audited person. The notice of
deficiency, audit report or similar
document may also contain one or more
proposed remedies that address findings
of noncompliance. Where such findings,
with or without proposed remedies,
appear in a notice of deficiency, audit
report or similar document, such
document shall be provided to the
audited person, and the finding or
findings, and any proposed remedies,
shall be noted and explained. The
audited person shall timely indicate in
a written response any and all findings
or proposed remedies, or both, in any
combination, with which the audited
person disagrees. The audited person
shall have 15 days from the date it is
sent the notice of deficiency, audit
report or similar document to provide a
written response to the audit staff
indicating any and all findings or
proposed remedies, or both, in any
combination, with which the audited
person disagrees, and such further time
as the audit staff may provide in writing
to the audited person at the time the
document is sent to the audited person.
The audited person may move the
Commission for additional time to
provide a written response to the audit
staff and such motion shall be granted
for good cause shown. Any initial order
that the Commission subsequently may
issue with respect to the notice of
deficiency, audit report or similar
document shall note, but not address on
the merits, the finding or findings, or
the proposed remedy or remedies, or
both, in any combination, with which
the audited person disagreed. The
Commission shall provide the audited
PO 00000
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DEPARTMENT OF LABOR
Mine Safety and Health Administration
30 CFR Parts 48, 50, and 75
RIN 1219–AB46
Emergency Mine Evacuation
Mine Safety and Health
Administration, Labor.
ACTION: Extension of comment period.
AGENCY:
SUMMARY: The Mine Safety and Health
Administration is extending the
comment period for the Emergency
Temporary Standard on Emergency
Mine Evacuation published on March 9,
2006 (71 FR 12252). This action is in
response to a request from the public.
DATES: The comment period will close
on June 29, 2006.
FOR FURTHER INFORMATION CONTACT:
Patricia W. Silvey, Acting Director;
Office of Standards, Regulations, and
Variances, MSHA; phone: (202) 693–
9440; facsimile: (202) 693–9441; E-mail:
Silvey.Patricia@dol.gov.
SUPPLEMENTARY INFORMATION: The Mine
Safety and Health Administration
(MSHA) received a request to extend the
public comment period for 60 days so
that interested parties could adequately
address issues contained in MSHA’s
opening statement. MSHA is conducting
this rulemaking under the statutory
requirement that the Agency must
publish the Final Rule no later than
December 9, 2006, that is, 9 months
following the publication of the ETS.
MSHA is granting a 30-day extension of
the comment period (from May 30,
2006, to June 29, 2006) to allow all
interested parties additional time to
provide input into this important
rulemaking. The comment period will
close on June 29, 2006; MSHA
welcomes comment from all interested
parties.
Dated: May 18, 2006.
David G. Dye,
Acting Assistant Secretary for Mine Safety
and Health.
[FR Doc. 06–4825 Filed 5–22–06; 9:53 am]
BILLING CODE 4510–43–P
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]]>Agencies
[Federal Register Volume 71, Number 100 (Wednesday, May 24, 2006)]
[Rules and Regulations]
[Pages 29779-29785]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4814]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 41, 158, 286 and 349
[Docket No. RM06-2-001; Order No. 675-A]
Procedures for Disposition of Contested Audit Matters
Issued May 18, 2006.
AGENCY: Federal Energy Regulatory Commission; DOE.
ACTION: Final rule, order on rehearing and clarification.
-----------------------------------------------------------------------
SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission
(Commission) is amending its regulations to expand due process for
certain audited persons who dispute findings or proposed remedies
contained in draft audit reports.
DATES: Effective Date: This Final Rule will become effective June 23,
2006.
FOR FURTHER INFORMATION CONTACT: John R. Kroeger, Office of
Enforcement, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426. (202) 502-8177. John.Kroeger@ferc.gov.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead
Brownell, and Suedeen G. Kelly.
Order No. 675-A
Order on Rehearing and Clarification
I. Introduction
1. On February 17, 2006, the Commission issued a Final Rule, Order
No. 675,\1\ that expands the procedural rights of persons subject to
all audits conducted by the Commission staff under the Federal Power
Act (FPA),\2\ the Natural Gas Act (NGA),\3\ the Natural Gas Policy Act
(NGPA),\4\ and the Interstate Commerce Act (ICA),\5\ except for audits
pertaining to reliability that the Commission authorized in Order No.
672.\6\ Prior to the effective date of Order No. 675, audited persons
who disagreed with non-financial audit matters approved by the
Commission were required to seek rehearing of that order to obtain
further Commission review.
---------------------------------------------------------------------------
\1\ Procedures for Disposition of Contested Audit Matters, Order
No. 675, 71 FR 9698 (Feb. 27, 2006), III FERC Stats. & Regs. ]
31,209 (Feb. 17, 2006).
\2\ 16 U.S.C. 791a, et seq. (2000).
\3\ 15 U.S.C. 717, et seq. (2000).
\4\ 15 U.S.C. 3301, et seq. (2000).
\5\ 49 U.S.C. App. 1, et seq. (2000).
\6\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, 71 FR 8662 (Feb. 17,
2006), III FERC Stats. & Regs. ] 31,204 (Feb. 2, 2006); reh'g
granted in part and denied in part, Order No. 672-A, 71 FR 19814
(Apr. 18, 2006), 114 FERC ] 61,328 (Mar. 30, 2006).
---------------------------------------------------------------------------
2. Pursuant to Order No. 675, audited persons may seek Commission
review of disputed matters contained in an audit report or similar
document in a procedure that provides additional due process to audited
persons subject to non-financial audits. Under this procedure, audited
persons may provide in writing to the audit staff a response to a draft
notice of deficiency, draft audit report or similar document
[[Page 29780]]
(collectively, draft audit report) indicating any and all findings or
proposed remedies, or both, in any combination, with which the audited
person disagrees. The audit staff communicates this response to the
Commission along with the draft audit report. The Commission may make
determinations on the merits in a public order with respect to the
findings and proposed remedies contained in the draft audit report that
are not in dispute. The Commission will publicly notice the disputed
items and provide the audited person the opportunity to elect in
writing a shortened procedure, which consists of a submission of
memoranda, or a trial-type hearing, by a date certain. The audited
person may timely respond to the notice in a public filing by electing
in writing the shortened procedure or the trial-type hearing.
3. The Commission will honor the audited person's timely election
(unless a trial-type hearing is chosen and there are in the
Commission's judgment no disputed issues of material fact requiring a
trial-type hearing) and issue a public notice setting the schedule for
submission of memoranda, in the case of the shortened procedure, or
referring the matter to the Chief Administrative Law Judge, in the case
of the trial-type hearing.
4. On March 20, 2006, Edison Electric Institute (EEI) timely filed
the only request for rehearing and clarification of Order No. 675.\7\
The Commission grants the request for rehearing and clarification filed
by EEI in four respects. First, the Commission grants EEI's request for
clarification regarding the scope of contested audit matters. Second,
the Commission grants EEI's request for clarification that contested
audit procedures will not be used to amend Final Rules. Third, the
Commission grants EEI's request for clarification by specifying that an
audited person shall have at least 15 days to provide in writing to the
audit staff a response to the draft audit report indicating findings or
proposed remedies with which it disagrees. Fourth, the Commission
grants the substance of EEI's proposal to change the regulatory text
regarding the time within which an audited person must elect either the
shortened procedure or a trial-type hearing. In all other respects, as
explained below, the Commission denies EEI's request for rehearing and
clarification.
---------------------------------------------------------------------------
\7\ See 16 U.S.C. 825l(a) (2000).
---------------------------------------------------------------------------
II. Discussion
A. Scope of Contested Audit Matters
5. In Order No. 675, the Commission stated that entities other than
the audited person and the audit staff may participate in the shortened
procedure or the trial-type hearing.\8\ The Commission explained that
an entity other than the audited person may have an interest in the
outcome of the contested audit proceeding and may have information
about the audited person's operations or proposed remedy that would
inform the Commission's determination regarding the contested issue.\9\
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\8\ Order No. 675 at P 11, 38.
\9\ Order No. 675 at P 11.
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1. Request for Rehearing or Clarification
6. EEI requests clarification, or in the alternative, rehearing,
that the Final Rule is not intended to allow intervenors to raise new
issues in response to a public notice of a contested audit report.\10\
EEI expresses concern that intervenors may seek to intervene in a
contested audit proceeding and raise issues that are beyond the scope
of contested issues raised by the audited person. EEI asserts that
allowing intervenors to expand the scope of audit proceedings in such a
manner would tend to dilute the due process rights afforded by Order
No. 675.\11\ To address this concern, EEI urges that the Final Rule
should be clarified to permit intervenors only to raise arguments or
facts that directly relate to a finding or remedy already at issue in
the contested audit proceeding. EEI contends that, under the FPA and
consistent with due process norms, new issues must be raised in a
section 206 complaint \12\ filed by the interested entity.\13\
---------------------------------------------------------------------------
\10\ EEI Request for Rehearing and Clarification at p. 6.
\11\ EEI Request for Rehearing and Clarification at pp. 5-7.
\12\ See 16 U.S.C. 824e (2000).
\13\ In support of its argument, EEI cites Public Service
Commission of N.Y. v. FERC, 642 F.2d 1335, 1345 (DC Cir. 1980), for
the proposition that section 4(e) of the NGA ``cannot be used by the
Commission to institute any change in a ratemaking component * * *
that does not represent at least partial approval of the change for
which the enterprise had petitioned in its filing. If the Commission
seeks to make such changes, it has no alternative save compliance
with the strictures of section 5(a).'' EEI also cites Public Service
Commission of Kentucky v. FERC, 397 F.3d 1004, 1012 (DC Cir. 2005),
for the proposition that ``[t]he Due Process Clause and the
[Administrative Procedure Act] require that an agency setting a
matter for hearing provide parties `with adequate notice of the
issues that would be considered, and ultimately resolved, at that
hearing.'''
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2. Commission Determination
7. The Commission grants EEI's request for clarification. An
interested entity that has successfully intervened in a proceeding will
be limited to arguments or facts that directly relate to a finding or
proposed remedy already at issue in the contested audit proceeding that
the audited person has appropriately designated and that is noted in
the Commission's initial order concerning the audit report or similar
document.\14\ Permitting an intervenor to raise extraneous issues could
deflect the focus of the contested proceeding from the designated issue
or issues, could cause unnecessary expense, litigation and delay, and
could require an audited person to litigate issues of which it had no
notice at the time it made its election to challenge a finding or
proposed remedy in the audit report.
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\14\ This limitation is consistent with Commission practice. For
example, the Commission has rejected the timely-filed or otherwise
accepted pleadings of intervenors where they addressed issues that
were not relevant to the Commission's disposition of a seller's
market-based rates application and where they related to issues that
were otherwise outside the scope of the proceeding. See H.Q. Energy
Services (U.S.) Inc., 81 FERC ] 61,184 at 61,809 n.5 (1997).
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B. Orders in Contested Audit Proceedings
1. Request for Rehearing or Clarification
8. EEI requests that the Commission clarify that it does not intend
the Final Rule's language regarding the precedential effect of
contested audit orders to create or support the ability to amend, by
individual adjudication, rules adopted through rulemaking
proceedings.\15\ EEI contends that such a result would be contrary to
law. EEI asserts that courts have struck down agencies' attempts to use
clarification and interpretations as a way of imposing more stringent
requirements and setting higher standards on the regulated
community.\16\ EEI also asserts that courts have rejected agencies'
efforts to enforce new policies by gradually imposing more restrictive
standards and higher burdens without allowing the regulated community
to participate or object.\17\
---------------------------------------------------------------------------
\15\ EEI Request for Rehearing and Clarification at p. 9.
\16\ To support this position, EEI cites Alaska Professional
Hunters Ass'n v. FAA, 177 F.3d 1030, 1034 (DC Cir. 1999) (Alaska
Professional Hunters Ass'n).
\17\ To support this position, EEI cites Appalachian Power Co.
v. EPA, 208 F.3d 1015, 1024 (DC Cir. 2000) (Appalachian Power).
---------------------------------------------------------------------------
2. Commission Determination
9. The Commission grants EEI's request for clarification. Orders
that the
[[Page 29781]]
Commission issues in contested audit proceedings will not amend rules
adopted through rulemaking proceedings.
C. Clarification of Time Frames for Audited Person To Respond
1. Request for Rehearing and Clarification
10. EEI states that if the Commission intended to require a 30-day
time frame in which the audited person must provide in writing to the
audit staff a response to the draft audit report noting the items with
which it disagrees, then EEI seeks rehearing of that determination. EEI
states that the time frame in which the audited person must provide in
writing to the audit staff a response to the draft audit report
indicating items with which it disagrees should be flexible and that it
should be determined by the Commission audit staff and the audited
person based on the facts of the audit. EEI also asks the Commission to
clarify the regulatory text to make it clear that after the public
issuance of the Commission's initial order concerning an audit report,
the audited person will have 30 days to respond to the Commission with
the selection of a shortened procedure or a trial-type proceeding.\18\
---------------------------------------------------------------------------
\18\ EEI Request for Rehearing and Clarification at pp. 10-11.
---------------------------------------------------------------------------
2. Commission Determination
11. The Commission grants EEI's request for clarification in part.
In Order No. 675, the Commission did not specify a time frame in which
the audited person must provide in writing to the audit staff a
response to the draft audit report noting the items with which it
disagrees. Instead, the pertinent regulation stated that the audited
person's written response must be ``timely.'' The Commission intended
that the audit staff would determine the length of time an audited
person would have to file a written response indicating the findings or
proposed remedies with which it disagrees. The relevant regulatory text
at Sec. Sec. 41.1, 158.1, 286.103 and 349.1 reads as follows:
Where such findings, with or without proposed remedies, appear
in a notice of deficiency, audit report or similar document, such
document shall be provided to the audited person, and the finding or
findings, and any proposed remedies, shall be noted and explained.
The audited person shall timely indicate in a written response any
and all findings or proposed remedies, or both, in any combination,
with which the audited person disagrees. Any initial order that the
Commission subsequently may issue with respect to the notice of
deficiency, audit report or similar document shall note, but not
address on the merits, the finding or findings, or the proposed
remedy or remedies, or both, in any combination, with which the
audited person disagreed. The Commission shall provide the audited
person 30 days to respond with respect to the finding or findings or
any proposed remedies, or both, in any combination, with which it
disagreed.
12. The Commission declines to adopt EEI's suggestion that both the
audited person and the audit staff determine the time period in which
the audited person shall provide a written response to the audit staff
indicating findings or proposed remedies with which the audited person
disagrees. If the time period for the audited person's submission of
this response were subject to agreement between the audited person and
the audit staff, there might be instances in which the audited person
and the audit staff would fail to agree, resulting in inappropriate
delay. The Commission recognizes, however, that a certain time period
for the audited person to provide a written response indicating
findings and proposed remedies with which it disagrees, with the
possibility for additional time if deemed necessary by the Commission,
would provide a measure of assurance to the audited person that it will
have sufficient time to make this written response to audit staff. The
Commission determines that 15 days to make this written response will
be sufficient time in the large majority of cases in which the audited
person and audit staff do not disagree regarding the contents of the
draft audit report. Even in the remaining instances in which the
audited person and the audit staff disagree regarding the contents of
the draft audit report, the discussion between them regarding the
contents of the draft audit report preceding the commencement of the
15-day period should render the allotted time sufficient for the
audited person to indicate the areas of disagreement. In instances in
which the audited person may require more than 15 days to provide a
written statement of findings or proposed remedies with which it
disagrees to audit staff, the audit staff may provide in writing to the
audited person additional time at the time the draft audit report is
sent. The audited person may also move the Commission for additional
time. Consequently, the Commission will add two sentences to follow the
second sentence of Sec. Sec. 41.1, 158.1, 286.103, and 349.1 quoted
above to read as follows: ``The audited person shall have 15 days from
the date it is sent the notice of deficiency, audit report or similar
document to provide a written response to the audit staff indicating
any and all findings or proposed remedies, or both, in any combination,
with which the audited person disagrees, and such further time as the
audit staff may provide in writing to the audited person at the time
the document is sent to the audited person. The audited person may move
the Commission for additional time to provide a written response to the
audit staff and such motion shall be granted for good cause shown.''
13. In Order No. 675, the Commission intended to indicate that an
audited person shall have 30 days to respond to a Commission order with
a selection of a shortened procedure or a trial-type proceeding.\19\
The 30-day provision in the last sentence quoted in paragraph 11 above
is meant to convey this intention. To remove any possible ambiguity,
the Commission will amend the last sentence of Sec. Sec. 41.1, 158.1,
286.103, and 349.1 quoted above, to read as follows: ``The Commission
shall provide the audited person 30 days to respond to the initial
Commission order concerning a notice of deficiency, audit report or
similar document with respect to the finding or findings or any
proposed remedy or remedies, or both, in any combination, with which it
disagreed.''
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\19\ Order No. 675 at P 24-25.
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D. Precedential Effect of Decisions in Contested Audit Matters
14. In Order No. 675, the Commission stated that a Commission order
that resolves a contested audit matter would be precedent for non-
parties. The Commission explained that an audited person who challenges
a finding or proposed remedy in an audit report using the procedure in
the Final Rule is participating in a contested, on-the-record
proceeding, and, like any other such proceeding before the Commission,
the legal reasoning and conclusions of the resulting order would apply
to non-parties.\20\
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\20\ Order No. 675 at P 32.
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1. Request for Clarification
15. EEI requests clarification that the Commission will not apply
any ruling on a contested audit matter to an entity that was not a
party to the adjudication unless and until the non-party entity has
been afforded an opportunity to challenge the basis of the ruling as it
applies to that entity. EEI states that the language in the Final Rule
regarding the precedential value of the Commission's rulings on a
contested audit may not be clear. According to EEI, judicial precedent
clearly supports its position. EEI relies principally upon Florida Gas
Transmission Co. v. FERC, 876 F.2d 42, 44 (5th Cir. 1989) (FGT). In
that case, the
[[Page 29782]]
United States Court of Appeals for the Fifth Circuit held that the
Commission did not sufficiently substantiate its decision to grant
individual NGA section 7(c) certificates for interruptible service for
a one-year term instead of the multi-year terms requested by FGT. The
Commission had relied on a policy of granting one-year terms for such
certificates. The court stated that due process
guarantees that parties who will be affected by the general rule be
given an opportunity to challenge the agency's action. When the rule
is established through formal rulemaking, public notice and hearing
provide the necessary protection. But where, as here, the rule is
established in individual adjudications, due process requires that
affected parties be allowed to challenge the basis of the rule. FERC
must be able to substantiate the general rule.\21\
---------------------------------------------------------------------------
\21\ FGT, 876 F.2d at 44 (citations omitted). EEI also cites PPL
Wallingford Energy LLC v. FERC, 419 F.3d 1194 (DC Cir. 2005). In
that case, the court vacated orders of the Commission on the grounds
that the Commission did not directly respond to or address arguments
the petitioner in that proceeding had made before the Commission.
---------------------------------------------------------------------------
2. Commission Determination
16. The Commission denies EEI's request for clarification. The
Commission plainly stated in the Final Rule that a Commission order
that resolves a contested matter has precedential effect.\22\ As the
Commission noted in Order No. 675, ``the choice made between proceeding
by general rule or by individual, ad hoc litigation is one that lies
primarily in the informed discretion of the administrative agency.''
\23\ The long-settled principle of Federal administrative law is that
``[a]bsent express congressional direction to the contrary, agencies
are free to choose their procedural mode of administration.'' \24\
---------------------------------------------------------------------------
\22\ Order No. 675 at P 32.
\23\ SEC v. Chenery Corp., 332 U.S. 194, 203 (1947).
\24\ Davis v. EPA, 336 F.3d 965 (9th Cir. 2003).
---------------------------------------------------------------------------
17. FGT does not require a different conclusion. The issue in that
case was whether the Commission could rely upon its one-year policy for
denying requests for longer term individual certificates or whether the
Commission needed to provide an explanation specific to FGT's
circumstances and failed to do so. On remand, the Commission gave an
explanation \25\ that the court subsequently concluded was
sufficient.\26\ To the extent that the Commission makes a determination
in a contested audit matter and subsequently applies that determination
to an audited person who had not been a party in the prior proceeding,
the Commission will provide a reasoned explanation to comply with
applicable legal standards.
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\25\ Florida Gas Transmission Co., 49 FERC ] 61,375 (1989).
\26\ Monsanto Co. v. FERC, 963 F.2d 827 (5th Cir. 1992).
---------------------------------------------------------------------------
18. In sum, just like other Commission contested, on-the-record
proceedings that provide third parties an opportunity to intervene and
participate, we find that Commission determinations in contested audit
proceedings are precedent for non-parties in subsequent proceedings.
And, as in such proceedings, the Commission will explain the
application of that precedent on the basis of the record developed in
subsequent proceedings.
E. Codifying the Determination in the Preamble of the Final Rule
1. EEI's Request for Rehearing and Clarification
19. EEI asks that the Commission include a number of its
determinations contained in the Final Rule in the regulatory text. EEI
states that the types of matters addressed in the Final Rule that were
not included in the regulatory text have been included in the
Commission's regulations on other occasions. As an example, EEI cites
Sec. 1b.16 of the Commission's regulations,\27\ which pertains, in
part, to the right of a person who is compelled to appear, or who
appears in person at the request or permission of the Investigating
Officer, to be accompanied, represented and advised by counsel, subject
to certain additional provisions. EEI notes in this regard that in the
Final Rule, the Commission stated that an attorney may be present
during interviews of an audited person's employees. EEI contends that a
person should not have to refer to the language of the Final Rule, but
instead should be able to consult the Commission's regulations, to
learn this information.\28\
---------------------------------------------------------------------------
\27\ 18 CFR 1b.16 (2005).
\28\ EEI Request for Rehearing and Clarification at pp. 11-14.
---------------------------------------------------------------------------
20. EEI identifies seven matters that it states are discussed in
the Final Rule but not reflected in the regulatory text. These matters
are (1) The right to have counsel present during an audit; (2) use by
the Commission of the standard set forth in Sec. 385.214(b) of its
regulations \29\ to govern interventions in contested audit proceedings
and the disallowances of interested persons to intervene until after
the Commission issues the notice described in Part 41 of the
Commission's regulations; (3) confidential treatment of information
provided in an audit; (4) the absence of discovery in the shortened
procedure and the applicability of Part 385 of the Commission's
regulations \30\ with respect to discovery in a trial-type proceeding;
(5) the precedential value of an audit report and an order approving an
uncontested audit report; (6) the 30-day time frame for an audited
person's response; \31\ and (7) protection of confidential treatment in
trial-type proceedings.
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\29\ 18 CFR 85.214(b) (2005).29
\30\ 18 CFR part 385 (2005).30
\31\ EEI's request with respect to the 30-day time frame for an
audit person's response is addressed supra P 11-13.31
---------------------------------------------------------------------------
2. Commission Determination
21. EEI has not provided a compelling reason for the Commission to
include the noted portions of the Final Rule in the regulatory text. In
particular, four of the issues EEI raises are not germane to the
procedural matters addressed in the regulatory text. The right to
counsel, confidential treatment, precedential value of an audit report
and a Commission order approving an uncontested audit report, and
protection of confidential treatment issues do not pertain to the
procedure an audited person may use to challenge findings or proposed
remedies in an audit report. Accordingly, it would not be appropriate
to include them in the regulatory text of the parts of Title 18
involved in this rulemaking. The Commission has exercised its
discretion in past proceedings to clarify matters in final rules and in
orders on rehearing of final rules without inserting those
clarifications in the underlying regulations.\32\
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\32\ See, e.g., Regulations Implementing Energy Policy Act of
2005; Pre-filing Procedures for Review of LNG Terminals and Other
Natural Gas Facilities, Order No. 665, 70 FR 60426 (Oct. 18, 2005),
FERC Stats. & Regs., Regulations Preambles 2001-2005 ] 31,195 (Oct.
7, 2005) (``In view of the clarification and regulatory text
revisions discussed above, the Commission does not believe that it
is necessary to include in the final regulations additional criteria
or definitions for the Director's use in reaching a determination
whether prospective modifications to an existing or approved LNG
terminal should be subject to a mandatory pre-filing process.'');
Standards of Conduct for Transmission Providers, Order No. 2004-A,
69 FR 23562 (Apr. 29, 2004), FERC Stats. & Regs., Regulations
Preambles 2001-2005 ] 31,161 (Apr. 16, 2004) (``The Commission
denies National Fuel-Supply's request to revise the regulatory text,
but clarifies that by using the term `relate' in the phrase `if it
relates solely to a Marketing or Energy Affiliate's specific request
for transmission service,' the Commission intended to include the
corresponding transportation service agreements that result from a
`request.' '').
---------------------------------------------------------------------------
22. The Commission's statements in the Final Rule regarding
interventions likewise do not warrant inclusion in the regulatory text.
The Commission stated that it will use the standard stated in Sec.
385.214(b),\33\ which is in subpart B of Part 385 of the Commission's
regulations, for permitting interested
[[Page 29783]]
entities to file memoranda in the shortened procedure as it uses to
permit interventions in other proceedings. Subpart B of Part 385
``applies to any pleading'' \34\ and thus no addition to the regulatory
text is needed to provide certainty.
---------------------------------------------------------------------------
\33\ 18 CFR 385.214(b) (2005).
\34\ 18 CFR 385.201 (2005).
---------------------------------------------------------------------------
23. The Commission's statements in the Final Rule regarding
discovery also do not warrant inclusion in the regulatory text. The
regulatory text accompanying the Final Rule does not authorize
discovery in the shortened procedure. The Final Rule clarified that
discovery is not available in the shortened procedure at EEI's
request.\35\ Again, adding language in the regulatory text will not
provide certainty. As is true for adding regulatory text regarding
interventions, adding regulatory text regarding discovery in trial-type
proceedings would also be redundant, in this case to the rules in Part
385 of the Commission's regulations.
---------------------------------------------------------------------------
\35\ Order No. 675 at P 9, 12. The Final Rule also clarified
that the applicable standards under Part 385 of the Commission's
regulations will govern if the trial-type procedure is used. Order
No. 675 n.25.
---------------------------------------------------------------------------
24. The Commission does not agree with EEI's contention that a
provision in Part 1b of the Commission's regulations, which pertains to
a person's right to have counsel present under certain circumstances in
an investigation, suggests that the revised Part 41 should also address
issues relating to counsel, in addition to other issues. Part 1b
contains provisions describing the Commission's policy and procedures
for investigations conducted under the statutes it administers. \36\
Part 41 does not describe the audit process. Instead, Part 41 sets
forth the procedure an audited person can use to challenge audit
findings or proposed remedies with which it disagrees. In sum, by
declining to include in the regulatory text the topics EEI references
the Commission is not acting in a manner inconsistent with its
promulgation of Part 1b.
---------------------------------------------------------------------------
\36\ Rules Relating to Investigations, Order No. 8, 43 FR 27174
(Jun. 23, 1978), FERC Stats. & Regs., Regulations Preambles 1977-
1981 ] 30,012 (1978).
---------------------------------------------------------------------------
F. Separation of Functions Issues
1. Request for Rehearing and Clarification
25. In its request for rehearing and clarification, EEI asks the
Commission to issue a policy statement, with an opportunity for public
comment, to consider and determine the appropriate relationship between
the Commission's audit and enforcement staffs during audits, shortened
or trial-type procedures for contested audit matters, and formal and
informal investigations under Part 1b of the Commission's regulations.
EEI asserts that the time is ripe for such a policy statement because
of developments and changes in the roles and functions of the audit and
enforcement staffs since the Commission's issuance of its Policy
Statement on Separation of Functions \37\ in 2002 and the Commission's
new and substantial enforcement and remedial authority under the Energy
Policy Act of 2005 (EPAct 2005).\38\ EEI states that the purpose of the
policy statement it proposes would be for the Commission to examine the
relationship of the audit and enforcement staffs to ensure that their
work is fair and consistent with due process rights and separations of
functions during every possible stage of the audit process and any
subsequent investigatory or enforcement action. EEI states that a
policy statement, with opportunity for public comment, would help build
an appropriate Commission record and basis for balancing separation of
functions and due process requirements.\39\ Finally, EEI asserts that a
case the Commission cited in the Final Rule, Trans Alaska Pipeline
System, 9 FERC ] 61,205 (1979), which states that the Commission's
audit and investigatory staffs may freely share information, is no
longer fully relevant.\40\
---------------------------------------------------------------------------
\37\ 101 FERC ] 61,340 (2002).
\38\ P.L. No. 109-58, 119 Stat. 594 (2005).
\39\ EEI Request for Rehearing and Clarification at pp. 14-15.
According to EEI, the Commission has not established a sufficient
basis and record with respect to this issue to satisfy the reasoned
decision making standard under the Administrative Procedure Act, 5
U.S.C. 706 (2000).
\40\ EEI Request for Rehearing and Clarification at pp. 15-16.
---------------------------------------------------------------------------
2. Commission Determination
26. The Commission declines EEI's proposal that the Commission
issue a policy statement concerning the relationship of its audit and
investigations staffs. As an initial matter, EEI's proposal is not
related to the Commission's promulgation of a new procedure for audited
persons seeking to challenge audit findings or proposed remedies, which
is the subject of Order No. 675. Moreover, the Commission already has a
policy statement on Separations of Functions,\41\ which is as
applicable today as it was when it was issued in 2002. Nothing in EPAct
2005 affects the operation of Rule 2202,\42\ which was the focus of
that policy statement.
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\41\ 101 FERC ] 61,340 (2002).
\42\ 18 CFR 385.2202 (2005).
---------------------------------------------------------------------------
27. For its part, EEI's request is not supported by facts. EEI does
not identify any specific practice or activity that warrants
examination. EEI refers to developments and changes since 2002, but
does not state what material developments and changes have occurred
that compel the public examination of separation of functions issues
that EEI requests. EPAct 2005 provided the Commission with enhanced
authority to assess civil penalties for violations of the FPA, NGA and
NGPA, but EEI does not suggest why this authority should trigger the
policy statement it seeks.\43\
---------------------------------------------------------------------------
\43\ Since the enactment of EPAct 2005, the Commission has
issued a number of statements and orders to provide guidance to the
regulated community. For example, in October 2005, the Commission
issued a Policy Statement on Enforcement to provide guidance and
regulatory certainty regarding the Commission's enforcement of the
statutes, orders, rules and regulations it administers. Enforcement
of Statutes, Orders, Rules, and Regulations, 113 FERC ] 61,068
(2005). In November 2005, the Commission issued an Interpretive
Order Regarding No-Action Letter Process to clarify that members of
the public may request and obtain no-action letters with respect to
whether staff will recommend that the Commission take no enforcement
action with respect to specific proposed transactions, practices or
situations that may raise issues under certain Commission
regulations. Informal Staff Advice on Regulatory Requirements, 113
FERC ] 61,174 (2005).
---------------------------------------------------------------------------
28. Trans Alaska Pipeline System remains relevant to the issue of
whether the audit staff and investigative staff may share information.
In that proceeding, the Trans Alaska Pipeline System owners asked that
the Commission forbid communications between the valuation and audit
staff on the one hand and the rate staff on the other. The Commission
determined, among other things, that communications between these two
staffs would not constitute impermissible, ex parte communications and
that the staffs need not be separated to ensure the integrity of the
valuation.\44\ The Commission approvingly quoted from a prior
proceeding in which it endorsed the sharing of information among
different staffs:
---------------------------------------------------------------------------
\44\ Trans Alaska Pipeline System, 9 FERC at 61,371-372.
Administrative agencies were brought into being to supply
expertise and to minimize formalism. Walls of separation between
those who litigate and those who investigate do not serve those
ends. Nor does due process require them. All that due process
mandates in situations of this kind is that adjudicative proceedings
be decided solely on the basis of the records developed in them.\45\
---------------------------------------------------------------------------
\45\ Id. at 61,372, quoting Tenneco, Inc., 7 FERC ] 61,258 at
61,541-542 (1979) (footnotes omitted).
29. Efficiency and sound administrative practice favors the sharing
of information between the audit staff and investigative staff, and no
entity suffers a cognizable due process harm as a result. We see no
need at this
[[Page 29784]]
time to reevaluate the interaction between these staffs.
The Commission orders: EEI's petition for rehearing and
clarification is granted in part and denied in part as discussed in the
body of this order.
By the Commission.
Magalie R. Salas,
Secretary.
List of Subjects
18 CFR Part 41
Administrative practice and procedure, Electronic utilities,
Reporting and recordkeeping requirements, Uniform System of Accounts.
18 CFR Part 158
Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements.
18 CFR Parts 286 and 349
Administrative practice and procedure, Natural gas, Price Controls.
0
In consideration of the foregoing, the Commission amends parts 41, 158,
286 and 349, Chapter I, Title 18 of the Code of Federal Regulations, as
follows:
PART 41--ACCOUNTS, RECORDS, MEMORANDA AND DISPOSITION OF CONTESTED
AUDIT FINDINGS AND PROPOSED REMEDIES
0
1. The authority citation for part 41 continues to read as follows:
Authority: 16 U.S.C. 791a-825r, 2601-2645; 42 U.S.C. 7101-7352.
0
2. Section 41.1 is revised to read as follows:
Sec. 41.1 Notice to audited person.
(a) Applicability. This part applies to all audits conducted by the
Commission or its staff under authority of the Federal Power Act except
for Electric Reliability Organization audits conducted pursuant to the
authority of part 39 of the Commission's regulations.
(b) Notice. An audit conducted by the Commission's staff under
authority of the Federal Power Act may result in a notice of deficiency
or audit report or similar document containing a finding or findings
that the audited person has not complied with a requirement of the
Commission with respect to, but not limited to, the following: A filed
tariff or tariffs, contracts, data, records, accounts, books,
communications or papers relevant to the audit of the audited person;
matters under the Standards of Conduct or the Code of Conduct; and the
activities or operations of the audited person. The notice of
deficiency, audit report or similar document may also contain one or
more proposed remedies that address findings of noncompliance. Where
such findings, with or without proposed remedies, appear in a notice of
deficiency, audit report or similar document, such document shall be
provided to the audited person, and the finding or findings, and any
proposed remedies, shall be noted and explained. The audited person
shall timely indicate in a written response any and all findings or
proposed remedies, or both, in any combination, with which the audited
person disagrees. The audited person shall have 15 days from the date
it is sent the notice of deficiency, audit report or similar document
to provide a written response to the audit staff indicating any and all
findings or proposed remedies, or both, in any combination, with which
the audited person disagrees, and such further time as the audit staff
may provide in writing to the audited person at the time the document
is sent to the audited person. The audited person may move the
Commission for additional time to provide a written response to the
audit staff and such motion shall be granted for good cause shown. Any
initial order that the Commission subsequently may issue with respect
to the notice of deficiency, audit report or similar document shall
note, but not address on the merits, the finding or findings, or the
proposed remedy or remedies, or both, in any combination, with which
the audited person disagreed. The Commission shall provide the audited
person 30 days to respond to the initial Commission order concerning a
notice of deficiency, audit report or similar document with respect to
the finding or findings or any proposed remedy or remedies, or both, in
any combination, with which it disagreed.
PART 158--ACCOUNTS, RECORDS, MEMORANDA AND DISPOSITION OF CONTESTED
AUDIT FINDINGS AND PROPOSED REMEDIES
0
3. The authority citation for part 158 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7102-7352.
0
4. Section 158.1 is revised to read as follows:
Sec. 158.1 Notice to audited person.
An audit conducted by the Commission's staff under authority of the
Natural Gas Act may result in a notice of deficiency or audit report or
similar document containing a finding or findings that the audited
person has not complied with a requirement of the Commission with
respect to, but not limited to, the following: A filed tariff or
tariffs, contracts, data, records, accounts, books, communications or
papers relevant to the audit of the audited person; matters under the
Standards of Conduct or the Code of Conduct; and the activities or
operations of the audited person. The notice of deficiency, audit
report or similar document may also contain one or more proposed
remedies that address findings of noncompliance. Where such findings,
with or without proposed remedies, appear in a notice of deficiency,
audit report or similar document, such document shall be provided to
the audited person, and the finding or findings, and any proposed
remedies, shall be noted and explained. The audited person shall timely
indicate in a written response any and all findings or proposed
remedies, or both, in any combination, with which the audited person
disagrees. The audited person shall have 15 days from the date it is
sent the notice of deficiency, audit report or similar document to
provide a written response to the audit staff indicating any and all
findings or proposed remedies, or both, in any combination, with which
the audited person disagrees, and such further time as the audit staff
may provide in writing to the audited person at the time the document
is sent to the audited person. The audited person may move the
Commission for additional time to provide a written response to the
audit staff and such motion shall be granted for good cause shown. Any
initial order that the Commission subsequently may issue with respect
to the notice of deficiency, audit report or similar document shall
note, but not address on the merits, the finding or findings, or the
proposed remedy or remedies, or both, in any combination, with which
the audited person disagreed. The Commission shall provide the audited
person 30 days to respond to the initial Commission order concerning a
notice of deficiency, audit report or similar document with respect to
the finding or findings or any proposed remedy or remedies, or both, in
any combination, with which it disagreed.
PART 286--ACCOUNTS, RECORDS, MEMORANDA AND DISPOSITION OF CONTESTED
AUDIT FINDINGS AND PROPOSED REMEDIES
0
5. The authority citation for part 286 is revised to read as follows:
Authority: 5 U.S.C. 551 et seq.; 15 U.S.C. 717-717w, 3301-3432;
42 U.S.C. 7102-7352.
[[Page 29785]]
0
6. Section 286.103 is revised to read as follows:
Sec. 286.103 Notice to audited person.
An audit conducted by the Commission's staff under authority of the
Natural Gas Policy Act may result in a notice of deficiency or audit
report or similar document containing a finding or findings that the
audited person has not complied with a requirement of the Commission
with respect to, but not limited to, the following: A filed tariff or
tariffs, contracts, data, records, accounts, books, communications or
papers relevant to the audit of the audited person; matters under the
Standards of Conduct or the Code of Conduct; and the activities or
operations of the audited person. The notice of deficiency, audit
report or similar document may also contain one or more proposed
remedies that address findings of noncompliance. Where such findings,
with or without proposed remedies, appear in a notice of deficiency,
audit report or similar document, such document shall be provided to
the audited person, and the finding or findings, and any proposed
remedies, shall be noted and explained. The audited person shall timely
indicate in a written response any and all findings or proposed
remedies, or both, in any combination, with which the audited person
disagrees. The audited person shall have 15 days from the date it is
sent the notice of deficiency, audit report or similar document to
provide a written response to the audit staff indicating any and all
findings or proposed remedies, or both, in any combination, with which
the audited person disagrees, and such further time as the audit staff
may provide in writing to the audited person at the time the document
is sent to the audited person. The audited person may move the
Commission for additional time to provide a written response to the
audit staff and such motion shall be granted for good cause shown. Any
initial order that the Commission subsequently may issue with respect
to the notice of deficiency, audit report or similar document shall
note, but not address on the merits, the finding or findings, or the
proposed remedy or remedies, or both, in any combination, with which
the audited person disagreed. The Commission shall provide the audited
person 30 days to respond to the initial Commission order concerning a
notice of deficiency, audit report or similar document with respect to
the finding or findings or any proposed remedy or remedies, or both, in
any combination, with which it disagreed.
PART 349--DISPOSITION OF CONTESTED AUDIT FINDINGS AND PROPOSED
REMEDIES
0
7. The authority citation for part 349 is revised to read as follows:
Authority: 42 U.S.C. 7101-7352; 49 U.S.C. 1, et seq.
0
8. Section 349.1 is revised to read as follows:
Sec. 349.1 Notice to audited person.
An audit conducted by the Commission or its staff under authority
of the Interstate Commerce Act may result in a notice of deficiency or
audit report or similar document containing a finding or findings that
the audited person has not complied with a requirement of the
Commission with respect to, but not limited to, the following: A filed
tariff or tariffs, contracts, data, records, accounts, books,
communications or papers relevant to the audit of the audited person;
and the activities or operations of the audited person. The notice of
deficiency, audit report or similar document may also contain one or
more proposed remedies that address findings of noncompliance. Where
such findings, with or without proposed remedies, appear in a notice of
deficiency, audit report or similar document, such document shall be
provided to the audited person, and the finding or findings, and any
proposed remedies, shall be noted and explained. The audited person
shall timely indicate in a written response any and all findings or
proposed remedies, or both, in any combination, with which the audited
person disagrees. The audited person shall have 15 days from the date
it is sent the notice of deficiency, audit report or similar document
to provide a written response to the audit staff indicating any and all
findings or proposed remedies, or both, in any combination, with which
the audited person disagrees, and such further time as the audit staff
may provide in writing to the audited person at the time the document
is sent to the audited person. The audited person may move the
Commission for additional time to provide a written response to the
audit staff and such motion shall be granted for good cause shown. Any
initial order that the Commission subsequently may issue with respect
to the notice of deficiency, audit report or similar document shall
note, but not address on the merits, the finding or findings, or the
proposed remedy or remedies, or both, in any combination, with which
the audited person disagreed. The Commission shall provide the audited
person 30 days to respond to the initial Commission order concerning a
notice of deficiency, audit report or similar document with respect to
the finding or findings or any proposed remedy or remedies, or both, in
any combination, with which it disagreed.
[FR Doc. 06-4814 Filed 5-23-06; 8:45 am]
BILLING CODE 6717-01-P
