Enforcement of Statutes, Orders, Rules, and Regulations, 13975-13979 [2024-03609]

Download as PDF 13975 Rules and Regulations Federal Register Vol. 89, No. 38 Monday, February 26, 2024 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. Dated: February 21, 2024. Ashley Waldron, Secretary to the Board, Farm Credit Administration. [FR Doc. 2024–03870 Filed 2–23–24; 8:45 am] BILLING CODE 6705–01–P The Code of Federal Regulations is sold by the Superintendent of Documents. DEPARTMENT OF ENERGY FARM CREDIT ADMINISTRATION Federal Energy Regulatory Commission 12 CFR Parts 614 and 620 18 CFR Part 1b RIN 3052–AD54 [Docket No. PL24–2–000] Loan Policies and Operations AGENCY: ACTION: Enforcement of Statutes, Orders, Rules, and Regulations Farm Credit Administration. Notification of effective date. The Farm Credit Administration (FCA, we, or our) issued a final rule amending our regulations governing young, beginning, and small farmers and ranchers (YBS). SUMMARY: The final rule was published on December 27, 2023 (88 FR 89280), and is effective as of February 14, 2024. DATES: FOR FURTHER INFORMATION CONTACT: Technical information: Jessica Tomlinson-Potter, Senior Policy Analyst, Office of Regulatory Policy, (703) 819–4667, TTY (703) 883–4056, potterj@fca.gov. or Legal information: Hazem Isawi, Senior Attorney, Office of General Counsel, (703) 883–4022, TTY (703) 883–4056, isawih@fca.gov. On October 12, 2023, FCA issued a final rule amending our regulations at 12 CFR parts 614 and 620 governing service to YBS. The final rule clarifies the responsibilities of funding banks in the review and approval of direct lender association YBS programs, strengthens funding bank internal controls, and bolsters YBS business planning. In accordance with 12 U.S.C. 2252(c)(1), the effective date of the rule is no earlier than 30 days from the date of publication in the Federal Register during which either or both Houses of Congress are in session. Based on the records of the sessions of Congress, the effective date of the regulations is February 14, 2024. khammond on DSKJM1Z7X2PROD with RULES SUPPLEMENTARY INFORMATION: VerDate Sep<11>2014 15:53 Feb 23, 2024 Jkt 262001 Federal Energy Regulatory Commission, DOE. ACTION: Policy statement. AGENCY: The Federal Energy Regulatory Commission revises its process for resolving by settlement investigations pursuant to the Commission’s regulations. Pursuant to this policy statement, the Commission grants the Director of Enforcement the discretion to authorize Office of Enforcement staff to engage in settlement negotiations without first seeking settlement authority from the Commission. When Office of Enforcement staff receives a viable offer of settlement from the subject of an investigation, it will present that offer to the Commission for voting, as is the case now. While the new process grants Office of Enforcement staff new discretion to commence settlement negotiations, it does not change the fact that it is the Commission that ultimately determines whether any proposed settlement of an investigation is in the public interest. DATES: This policy statement is effective February 26, 2024. FOR FURTHER INFORMATION CONTACT: Jennifer Gordon, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502– 5908, jennifer.gordon@ferc.gov John Hebden, Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502– 8821, john.hebden@ferc.gov SUPPLEMENTARY INFORMATION: SUMMARY: PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 Policy Statement on Process for Resolving Investigations by Settlement (Issued February 15, 2024) 1. The Commission issues this policy statement to provide updated guidance as to our enforcement process and policies concerning resolution by settlement of investigations that are initiated pursuant to part 1b of the Commission’s regulations.1 Based on our experience over the past 15 years operating pursuant to our existing settlement process as originally adopted in 2008,2 consideration of other Federal enforcement program settlement processes, and related industry feedback, we have determined that the Commission’s existing settlement process would benefit from certain enhancements. Specifically, and in recognition of the important role that settlements play in enforcement, the reforms discussed herein are designed to streamline the settlement process, to ensure that both the Commission and subjects of Commission investigations can resolve investigations efficiently. 2. As discussed in more detail below, pursuant to this Policy Statement, we replace the Commission’s existing process whereby Office of Enforcement (Enforcement) staff must seek settlement authority from the Commission prior to engaging in settlement negotiations with the subject of an investigation, with a process where the Director of Enforcement has the discretion to authorize Enforcement staff to engage in such negotiations. Under this new process, formal settlement authority, with settlement terms pre-reviewed by the Commission, will not be a necessary precondition to the initiation of settlement negotiations. Instead, with the Director of Enforcement’s authorization, Enforcement staff will engage in negotiations with the subject of an investigation and, if and when Enforcement staff receives a viable settlement offer from the subject, it will negotiate the applicable terms and thereafter present the written Offer of Settlement to the Commission for formal voting. Importantly, while the new process grants Enforcement staff new discretion to commence and engage in settlement negotiations, it does not 1 18 CFR pt. 1b (2023). Enf’t of Statutes, Reguls. and Ords., 123 FERC ¶ 61,156, at PP 33–34 (2008) (Revised Policy Statement on Enforcement). 2 See E:\FR\FM\26FER1.SGM 26FER1 13976 Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Rules and Regulations change the fact that it is the Commission that ultimately determines whether a settlement of an investigation is in the public interest and should be approved. 3. Given the significant role settlements play in the Commission’s enforcement program, it is important to ensure that the policies and practices governing the settlement process are efficient and effective. Ensuring that the Commission moves expeditiously benefits the subjects of Commission investigations who want to resolve investigations early, as well as any market participants, customers, and the public who may have been harmed by the alleged violations and to whom disgorgement and restitution may be directed once settlement is achieved. The reforms adopted herein to the Commission’s settlement process enhance both Enforcement staff’s and investigative subjects’ ability to negotiate settlements and reduce the time it takes to reach resolution by settlement. As a result, the Commission’s settlement practices will better align with those of similarly situated Federal agencies which do not require that Enforcement staff request settlement authority prior to engaging in settlement negotiations with subjects of investigations. khammond on DSKJM1Z7X2PROD with RULES I. Introduction and Background A. Role of Settlements in Part 1b Investigations 4. Settlement is the preferred means for the Commission to resolve investigations that would otherwise result in a recommendation of remedial action.3 Settlements allow the Commission to devote its limited resources to investigating other cases, rather than expending significant resources in protracted litigation, which supports our mission of ensuring the jurisdictional markets remain free from fraud, manipulation, and anticompetitive conduct.4 The Commission has explained that ‘‘the public interest is often better served through settlements because we are able to ensure that compliance problems are remedied faster and that disgorged profits may be returned to customers faster.’’ 5 In addition, while the Commission does not make findings as to whether a violation occurred in an order approving or rejecting a settlement offer,6 early and transparent publication 3 Id. P 33. 4 Id. 5 Id. 6 Rather, the Commission determines only whether the settlement is a fair and equitable resolution of the matters concerned and is in the public interest. See, e.g., Todd Meinershagen, 181 VerDate Sep<11>2014 15:53 Feb 23, 2024 Jkt 262001 of settlements permits the Commission to expeditiously alert other market participants to potential compliance pitfalls and helps avoid repetition of unlawful conduct. B. Revised Policy Statement on Enforcement 5. In 2008, the Commission issued its Revised Policy Statement on Enforcement to ‘‘provide guidance to the regulated community as to [its] enforcement policies concerning our governing statutes, regulations, and orders.’’ 7 The Revised Policy Statement on Enforcement was designed to ‘‘give the industry a fuller picture of how our investigative process works, including the considerations Enforcement staff takes into account in determining whether to open an investigation and, once opened, whether to close it without further action or to recommend sanctions.’’ 8 Consistent with this purpose, the Revised Policy Statement on Enforcement detailed the procedures the Commission, and in particular Enforcement staff, follow when initiating, conducting, and resolving an investigation.9 6. The Revised Policy Statement on Enforcement explained that, before recommending the Commission commence an enforcement proceeding, Enforcement staff will attempt to reach a settlement with the subject of an investigation. The Commission noted that this is valuable to the subjects of investigations, who benefit from potentially lower negotiated penalties 10 and avoiding the costs and risks of litigation.11 Further, the Commission explained that resolution of FERC ¶ 61,251, at PP 14–20 (2022); ISO-New England, Inc., 180 FERC ¶ 61,223, at PP 88–95 (2022); Enerwise Glob. Tech., LLC d/b/a CPower, 180 FERC ¶ 61,126, at PP 17–18 (2022). 7 Revised Policy Statement on Enforcement at P 1. The Revised Policy Statement on Enforcement followed an earlier policy statement on Enforcement issued in 2005, following enactment of the Energy Policy Act of 2005, Public Law 109–58, 119 Stat. 594 (2005) (EPAct 2005). See Enf’t of Statutes, Ords., Rules, and Reguls, 113 FERC ¶ 61,068 (2005) (Policy Statement on Enforcement). 8 Revised Policy Statement on Enforcement at P 5. 9 Id. PP 20–71. 10 In adopting and subsequently revising its Penalty Guidelines, the Commission formalized this financial benefit for settling parties, by providing a specific and transparent credit to subjects in the penalty calculation for resolving a matter without the need for a trial-type hearing. The Commission also separately provides credit for cooperating with Enforcement staff and for accepting responsibility. See FERC Penalty Guidelines Section 1C2.3(c) (detailing possible reductions to the culpability score, which is used to calculate the civil penalty guideline ranges for any particular violation of an organization). 11 Revised Policy Statement on Enforcement at P 33. PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 investigations by settlement benefits the public interest, by ensuring the quick remediation of compliance problems and return to customers of any ill-gotten gains.12 7. With regard to process, the Revised Policy Statement on Enforcement set forth a means by which Enforcement staff would request settlement authority from the Commission, prior to engaging in settlement negotiations.13 It explained that Enforcement staff would seek ‘‘authority to negotiate within a range of potential civil penalties and/or disgorgement’’ and that this process would ensure that ‘‘the Commission, not staff, determines the appropriate range of remedies for purposes of settlement.’’ 14 If Enforcement staff and the subject of an investigation reach a settlement in principle, the Revised Policy Statement on Enforcement provides that staff will submit an executed Stipulation and Consent Agreement to the Commission for its consideration.15 C. Current Policies and Practices Regarding Settlement of Part 1b Investigations 8. Since issuance of the Revised Policy Statement on Enforcement in 2008, Enforcement staff has followed the process detailed therein whereby it seeks settlement authority from the Commission prior to entering into settlement negotiations with the subject of an investigation. Pursuant to this process, after commencing an investigation under part 1b of the Commission’s regulations and engaging in initial discovery, but before any formal settlement negotiations take place, Enforcement staff presents to the Commission its views, as developed to that date by the investigation,16 and a recommended range of potential civil penalties 17 and/or disgorgement. The 12 Id. 13 Id. P 34. (requiring Enforcement staff to provide the Commission with the subject’s written response to staff’s views, if submitted, so that the Commission has both the views of its staff and the subject before it determines whether to authorize settlement negotiations). 15 Id. 16 If at any time Enforcement staff determines that no violation has occurred, the evidence is insufficient to warrant further investigation, or no further action is otherwise called for based on a totality of the circumstances, it closes the investigation. Id. P 31. Enforcement staff’s annual Reports on Enforcement detail examples of cases that Enforcement staff closes without taking action. See e.g., 2023 Report on Enforcement, Docket No. AD07–13–017, at 19 (Nov. 16, 2023). 17 The civil penalty range for organizations is informed by the Commission’s Penalty Guidelines. Penalties for individuals are determined on a caseby-case basis. See FERC Penalty Guidelines Section 1A1.1, Application Note 1. 14 Id. E:\FR\FM\26FER1.SGM 26FER1 Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Rules and Regulations subject’s response to Enforcement staff’s preliminary findings, if available, is also provided to the Commission.18 The Commissioners then determine whether to approve, modify, or deny the settlement authority, or provide alternative direction on how to proceed with the investigation. 9. Settlement authority is not preapproval of any settlement ultimately reached between Enforcement staff and an investigative subject consistent with the authority granted. Any settlement reached after obtaining settlement authority must still subsequently be approved by the Commission to be effective, based on a finding that the settlement is in the public interest. Thus, while Enforcement staff can recommend a settlement to the Commission, it cannot guarantee that the Commission will approve a recommended settlement, including the specific terms and conditions of the final stipulation and agreement. After Enforcement staff reaches a proposed settlement with a subject, it submits a Stipulation and Consent Agreement— executed by both the subject and the Director of Enforcement—to the Commission for formal voting. The Stipulation and Consent Agreement, as well as the related order approving the settlement, are generally released publicly upon approval.19 khammond on DSKJM1Z7X2PROD with RULES II. Discussion A. Need for Reform 10. The Commission’s existing process for settling cases, which requires staff to seek settlement authority from the Commission in all cases prior to engaging in settlement negotiations, would benefit from certain improvements in light of both Enforcement staff’s increased and broad experience investigating violations and recommending appropriate sanctions for such violations, and inefficiencies that the current authorization process can present in many cases for the Commission, Enforcement and other Commission staff, and investigative subjects. 11. The existing settlement authority process was adopted in the 2008 Revised Policy Statement on Enforcement, as part of the Commission’s efforts to provide guidance to the regulated community as to our enforcement policies in light of the enhanced enforcement tools created 18 See Revised Policy Statement on Enforcement at P 32 (describing the process by which Enforcement staff shares its preliminary findings with investigative subjects and provides them the opportunity to respond). 19 Id. P 34. VerDate Sep<11>2014 15:53 Feb 23, 2024 Jkt 262001 by EPAct 2005.20 At the time of issuance of the 2008 Revised Policy Statement on Enforcement, the Commission had little experience implementing its new enforcement authorities 21 and had not yet adopted the Penalty Guidelines.22 12. Over the past 15 years, the Commission has gained significant experience implementing its enhanced enforcement authorities. Since 2007, Enforcement staff has negotiated over 150 settlements, pursuant to which investigative subjects have agreed to pay almost a billion dollars in civil penalties and over a half a billion dollars in disgorgement.23 The breadth and diversity of matters investigated and settled has allowed Enforcement staff to gain broad experience, which informs settlement negotiations by allowing Enforcement staff to compare factual circumstances to prior matters when considering appropriate remedies in those negotiations.24 Similarly, in recent years the Federal courts have issued opinions interpreting the Commission’s enforcement authorities. These Federal court cases shed light on legal principles, which in turn can help guide and inform settlement negotiations by giving insight into the strength of Enforcement staff’s legal claims, for example. 13. Further, in 2010, after adoption of the existing settlement authority process, the Commission adopted its Penalty Guidelines to ‘‘add greater fairness, consistency, and transparency to our enforcement program.’’ 25 The Penalty Guidelines assign specific and transparent weight to each factor taken into consideration in calculating a proposed penalty, allowing organizations to know with more 20 See generally Revised Policy Statement on Enforcement. 21 Revised Policy Statement on Enforcement at PP 10–11 (noting that from the time of EPAct 2005 going into effect through the issuance of the 2008 Revised Policy Statement on Enforcement, the Commission had only resolved 14 investigations by settlement and had only issued two Orders to Show Cause, which at that time remained pending proceedings). 22 See Enf’t of Statutes, Ords., Rules, and Reguls., 132 FERC ¶ 61,216 (2010) (Revised Policy Statement on Penalty Guidelines) (adopting the FERC Penalty Guidelines, which are modeled on the United States Sentencing Guidelines). 23 See 2023 Report on Enforcement at 19. During this time, Enforcement has also initiated and subsequently closed without further action hundreds of investigations. 24 See id. at 20–22 (describing the types of violations Enforcement staff has resolved by settlement, including violations of: the Federal Power Act, Natural Gas Act, and Interstate Commerce Act; RTO/ISO tariff provisions; the Reliability Standards; the Anti-Manipulation Rule and the Commission’s market behavior rules; Commission orders; amongst others). 25 Revised Policy Statement on Penalty Guidelines at P 2. PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 13977 certainty and in advance how each factor will be applied in any particular case, thereby allowing an organization to evaluate how much risk it could face in light of an investigation of potential violations.26 Since their adoption, Enforcement staff has used the Penalty Guidelines to analyze and calculate an appropriate penalty range for any alleged violations of organizations being investigated, thus ensuring consistency and transparency across investigations. Given this experience, Enforcement staff need not obtain express sign-off from the Commission on a particular settlement range prior to engaging in settlement negotiations.27 Similarly, Enforcement staff has also gained experience recommending civil penalties for individuals and settling such matters 28 and the Commission has precedent assessing civil penalties against individuals.29 14. We note also that one of the only stated justifications for adopting the existing settlement authority process in the 2008 Revised Policy Statement on Enforcement was that it would ‘‘ensure[ ] that the Commission, not staff, determines the appropriate range of remedies for purposes of settlement.’’ 30 Under the revised 26 Id. PP 2, 5 (‘‘[T]he Penalty Guidelines . . . provide more clarity and consistency by assessing civil penalties based on objective characteristics and a uniform set of factors weighted similarly for similar violations and similar violators. . . . [T]he Penalty Guidelines . . . provide transparency by describing the factors we consider in our penalty determinations and the weight afforded to each factor.’’). 27 The Commission retains the discretion to depart from the Penalty Guidelines, based on an individualized assessment of the facts presented in any case, when appropriate. Id. PP 2, 5, 19. However, it is worth noting that departures from the Penalty Guidelines are uncommon. In the context of settlement negotiations, Enforcement staff will inform the subject of the investigation of any departures from the Penalty Guidelines it will recommend to the Commission. Id. P 32 n.51. 28 See, e.g., Todd Meinershagen, 181 FERC ¶ 61,251. 29 See, e.g., Vitol Inc., 169 FERC ¶ 61,070 (2019) (assessing civil penalty of $1,000,000 against Federico Corteggiano, a trader for Vitol Inc.); Houlian Chen, 151 FERC ¶ 61,179 (2015) (assessing civil penalty of $1,000,000 against Houlian Chen, a trader for Powhatan Energy Fund, LLC, HEEP Fund, LLC, and CU Fund, Inc.); Coaltrain Energy, L.P., 155 FERC ¶ 61,204 (2016) (assessing civil penalties of $5,000,000 each against Peter Jones and Shawn Sheehan, co-owners of Coaltrain Energy, L.P., and $1,000,000 against Robert Jones, $500,000 against Jeff Miller, and $500,000 against Jack Wells, traders for Coaltrain Energy, L.P.). Each of the aforementioned cases against individuals subsequently settled. See Vitol Inc., 186 FERC ¶ 61,008 (2024); Coaltrain Energy, L.P., 181 FERC ¶ 61,031 (2022); Houlian Chen, 177 FERC ¶ 61,076 (2021). 30 Revised Policy Statement on Enforcement at P 34. Notably, this statement predates the Commission’s adoption of Penalty Guidelines for organizations, the existence of which now provides E:\FR\FM\26FER1.SGM Continued 26FER1 13978 Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES settlement process the Commission will continue to determine the appropriate remedy for purposes of settlement. The Commission must approve any settlement Enforcement staff negotiates and find that the settlement and its terms are in the public interest. Giving Enforcement staff the discretion to initiate settlement negotiations does not affect the Commission’s ability to ultimately consider, discuss, and approve or reject the proposed resolution of any matter. 15. Further, in addition to developments over the past 15 years, the Commission has also found that, in its experience, requiring pre-authorization to engage in settlement negotiations in all cases—regardless of the seriousness of the alleged violation or the complexity of the case—creates unnecessary burdens on Commission staff and investigative subjects who are seeking prompt resolution of investigations. 16. The existing settlement authority process can result in an inefficient allocation of limited agency resources. Under the existing process, in all cases Enforcement staff and other Commission program offices invest significant time in seeking approval to commence negotiations, no matter how likely the prospects of settlement are. However, after all the time and effort spent on pre-authorization to engage in settlement negotiations, the parties may not agree to the terms of a settlement.31 In these cases, the Commission resources and time spent preauthorizing settlement authority could have instead been expended on other Commission priorities. 17. Investigative subjects have also expressed frustration at the time it can take to complete the settlement authority process in some cases. Enforcement staff has found that increasingly subjects are inclined to try to resolve investigations quickly through settlement, particularly in cases where there are no factual disputes. Moreover, prolonging the settlement process by requiring authorization to negotiate can result in added burden and expense on investigative subjects. As a result, investigative subjects are often ready to begin negotiations and determine whether a settlement is attainable, and the existing settlement staff significant guidance in their determination of appropriate penalties in a given matter. 31 Sometimes the subject of an investigation may not want to engage in settlement negotiations at all. Even in situations where Enforcement staff thinks settlement is unlikely, under the existing process it still requests settlement authority from the Commission. In such situations, this process ends up being a mere formality. VerDate Sep<11>2014 15:53 Feb 23, 2024 Jkt 262001 authority process represents a delay— sometimes of several months or more— in getting to this step. 18. Finally, the prolonged settlement authority process also delays public dissemination of information about the alleged misconduct. Transparency can help prevent further misconduct by sending a message of deterrence. Moreover, expedient resolution of investigations by settlement ensures that ill-gotten gains are returned to harmed market participants and consumers as quickly as possible. 19. Both the experience Enforcement staff has gained investigating and settling diverse cases over the past 15 years and the adoption of, and experience applying, the Penalty Guidelines have created a strong framework for Enforcement staff to evaluate whether settlement of an investigation, and on what terms, can be recommended to the Commission to be found to be in the public interest. Further, we find that the existing settlement authority process is inefficient, in that it unnecessarily consumes limited agency resources and potentially delays resolution of investigations by settlement. These factors weigh heavily in favor of streamlining the settlement process to eliminate the unnecessary intermediate step of getting settlement authority. B. Streamlined Settlement Process 20. In light of our experience and also feedback received from the regulated industry and subjects of Commission investigations, we hereby revise our existing process for settling investigations initiated pursuant to part 1b of the Commission’s regulations. Specifically, we will no longer require Enforcement staff to obtain settlement authority from the Commission prior to initiating and negotiating a potential settlement of an investigation. Instead, we hereby grant the Director of Enforcement the authority to authorize Enforcement staff to commence settlement negotiations and/or respond with counteroffers to settlement negotiations initiated by a subject. The Director of Enforcement retains the existing discretion to engage with the Commission for feedback prior to authorizing staff to engage in such settlement negotiations on any particular investigation. 21. After engaging in settlement negotiations, should an investigative subject submit a viable Offer of Settlement,32 Enforcement staff will 32 By ‘‘viable’’ we mean a settlement offer that Enforcement staff, in its considered discretion, believes is sufficient to recommend to the PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 submit the Offer of Settlement to the Commission for voting, along with any other information that might aid the Commission’s determination as to whether to accept the Offer of Settlement, including for example, details about the specifics of the alleged violation(s), facts developed by the investigation to date, and/or the relevant law. Enforcement staff will also submit the subject’s response to any preliminary findings issued by Enforcement staff, when available. The Offer of Settlement will be executed by the subject of the investigation and will remain non-public unless and until it is approved by the Commission.33 22. The major benefit of this approach to settlement negotiations is that it will greatly improve the efficiency of the settlement process, thereby allowing Enforcement staff to devote time that would otherwise be spent seeking settlement authority to other Commission investigations or proceedings. Further, unlike the existing settlement authority process, this new process ensures that Commission staff and the Commissioners are only investing time analyzing settlement terms that are known to be acceptable to the subject of the investigation, as they have been presented in an Offer of Settlement. We expect that these efficiency gains will lead to speedier resolutions of investigations, which will better serve the subjects of investigations, as well as the public who will see the benefits of required remediation faster. We also note that the approach to settlement negotiations set forth in this policy statement aligns with other similarly situated Federal agency enforcement programs, including the Securities and Exchange Commission and the Commodity Futures Trading Commission. 23. Further, as previously stated, this new process does not change the fact that it is the Commission, not staff, that ultimately determines whether or not any settlement of an investigation is in the public interest. Consistent with our existing process, an Offer of Settlement, as well as the related order approving the settlement, will generally be released publicly upon approval. Commission for approval based on Commission precedent, the facts of the case, and review of the Penalty Guidelines. 33 This replaces the existing process whereby Enforcement staff typically submits for voting a Stipulation and Consent Agreement executed by both the subject of the investigation and the Director of Enforcement. E:\FR\FM\26FER1.SGM 26FER1 Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Rules and Regulations C. Other Considerations and Clarifications 24. The settlement authority process and enhancements detailed in this policy statement apply only to the process by which the Commission resolves investigations conducted by Enforcement staff pursuant to 18 CFR part 1b, including investigations that relate to violations of the mandatory Reliability Standards. The reforms discussed herein do not change the process by which parties to a docketed proceeding pending before the Commission or set for hearing submit settlements to the Commission for consideration,34 nor do they affect the process by which the Commission reviews proposed penalties (including those agreed to by settlement) imposed by NERC and/or the Regional Entities for violations of the Reliability Standards.35 type the docket number excluding the last three digits of this document in the docket number field. 28. User assistance is available for eLibrary and the Commission’s website during normal business hours from the Commission’s Online Support at (202) 502–6652 (toll free at 1–866–208–3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502–8371, TTY (202) 502–8659. Email the Public Reference Room at public. referenceroom@ferc.gov. V. Effective Date 29. This policy statement is effective February 26, 2024. By the Commission. Issued: February 15, 2024. Debbie-Anne A. Reese, Acting Secretary. [FR Doc. 2024–03609 Filed 2–23–24; 8:45 am] BILLING CODE 6717–01–P III. Conclusion 25. As a Commission, we are always striving to responsibly implement our enforcement authorities, and to that end, to continually improve and enhance our enforcement policies and procedures to better serve the public. Consistent with that goal, we issue this policy statement and hereby streamline our settlement process by eliminating the requirement that Enforcement staff seek settlement authority from the Commission prior to initiating settlement negotiations, and instead grant new discretion to the Director of Enforcement to authorize the commencement of settlement negotiations. We believe these reforms will result in more effective and efficient resolutions of part 1b investigations by settlement. khammond on DSKJM1Z7X2PROD with RULES IV. Document Availability 26. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested parties an opportunity to view and/or print the contents of this document via the internet through the Commission’s homepage (https:// www.ferc.gov). 27. From the Commission’s homepage on the internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, 34 See 18 CFR 385.602 (2023). For example, the reforms we announce today will not affect the settlement process during an Order to Show Cause proceeding stemming from a Part 1b investigation. 35 See generally, N. Am. Elec. Reliability Corp., 116 FERC ¶ 61,062 (2006). VerDate Sep<11>2014 15:53 Feb 23, 2024 Jkt 262001 DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 1150 [Docket No. FDA–2012–N–0920] User Fees; Technical Amendment Food and Drug Administration, (HHS). ACTION: Final rule; technical amendment. AGENCY: The Food and Drug Administration (FDA or Agency) is amending its regulations to update a link regarding user fee disputes. This technical amendment is nonsubstantive. SUMMARY: This rule is effective February 26, 2024. FOR FURTHER INFORMATION CONTACT: Nate Mease and Tamika Hopkins, Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993–0002, 1–877–287–1373, email: CTPRegulations@fda.hhs.gov. SUPPLEMENTARY INFORMATION: FDA is amending § 1150.15 (21 CFR 1150.15) to update the web address for information regarding user fee disputes. FDA’s user fee dispute regulations currently link to FDA’s general web page on tobacco products. FDA is revising § 1150.15 to specifically direct firms to FDA’s web page on tobacco product user fees by replacing ‘‘https://www.fda.gov/ tobacco-products’’ with ‘‘https:// DATES: PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 13979 www.fda.gov/tobacco-products/ manufacturing/tobacco-user-fees’’ in two places. Publication of this document constitutes final action on these changes under the Administrative Procedure Act (APA) (5 U.S.C. 553). The APA generally exempts rules from the requirements of notice and comment rulemaking when an agency ‘‘for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest’’ (5 U.S.C. 553(b)(B)). FDA has determined that notice and public comment are unnecessary because this amendment to the regulation provides only technical or non-substantive, ministerial changes to specify the location of information on FDA’s web page regarding tobacco product user fee program. Such technical, non-substantive changes are ‘‘routine determination[s], insignificant in nature and impact, and inconsequential to the industry and to the public.’’ (Mack Trucks, Inc. v. EPA, 682 F.3d 87, 94 (D.C. Cir. 2012)) (quotation marks and citation omitted). Accordingly, FDA for good cause finds that notice and public procedure thereon are unnecessary for changing the cited FDA web page on tobacco user fees. In addition, FDA finds good cause for these amendments to become effective on the date of publication of this action. The APA allows an effective date of less than 30 days after publication as ‘‘provided by the agency for good cause found and published with the rule’’ (5 U.S.C. 553(d)(3)). A delayed effective date is unnecessary in this case because the amendments do not impose any new regulatory requirements on affected parties. As a result, affected parties do not need time to prepare before the rule takes effect. Therefore, FDA finds good cause for this correction to become effective on the date of publication of this action. List of Subjects in 21 CFR Part 1150 Tobacco products, User fees. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 1150 is amended as follows: PART 1150—USER FEES 1. The authority citation for part 1150 continues to read as follows: ■ Authority: 21 U.S.C. 371, 387a, 387b, 387i, 387s, 21 CFR 1100.1. E:\FR\FM\26FER1.SGM 26FER1

Agencies

[Federal Register Volume 89, Number 38 (Monday, February 26, 2024)]
[Rules and Regulations]
[Pages 13975-13979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03609]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 1b

[Docket No. PL24-2-000]


Enforcement of Statutes, Orders, Rules, and Regulations

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Policy statement.

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SUMMARY: The Federal Energy Regulatory Commission revises its process 
for resolving by settlement investigations pursuant to the Commission's 
regulations. Pursuant to this policy statement, the Commission grants 
the Director of Enforcement the discretion to authorize Office of 
Enforcement staff to engage in settlement negotiations without first 
seeking settlement authority from the Commission. When Office of 
Enforcement staff receives a viable offer of settlement from the 
subject of an investigation, it will present that offer to the 
Commission for voting, as is the case now. While the new process grants 
Office of Enforcement staff new discretion to commence settlement 
negotiations, it does not change the fact that it is the Commission 
that ultimately determines whether any proposed settlement of an 
investigation is in the public interest.

DATES: This policy statement is effective February 26, 2024.

FOR FURTHER INFORMATION CONTACT: 

Jennifer Gordon, Office of Enforcement, Federal Energy Regulatory 
Commission, 888 First Street NE, Washington, DC 20426, (202) 502-5908, 
[email protected]
John Hebden, Office of Enforcement, Federal Energy Regulatory 
Commission, 888 First Street NE, Washington, DC 20426, (202) 502-8821, 
[email protected]

SUPPLEMENTARY INFORMATION:

Policy Statement on Process for Resolving Investigations by Settlement

(Issued February 15, 2024)

    1. The Commission issues this policy statement to provide updated 
guidance as to our enforcement process and policies concerning 
resolution by settlement of investigations that are initiated pursuant 
to part 1b of the Commission's regulations.\1\ Based on our experience 
over the past 15 years operating pursuant to our existing settlement 
process as originally adopted in 2008,\2\ consideration of other 
Federal enforcement program settlement processes, and related industry 
feedback, we have determined that the Commission's existing settlement 
process would benefit from certain enhancements. Specifically, and in 
recognition of the important role that settlements play in enforcement, 
the reforms discussed herein are designed to streamline the settlement 
process, to ensure that both the Commission and subjects of Commission 
investigations can resolve investigations efficiently.
---------------------------------------------------------------------------

    \1\ 18 CFR pt. 1b (2023).
    \2\ See Enf't of Statutes, Reguls. and Ords., 123 FERC ] 61,156, 
at PP 33-34 (2008) (Revised Policy Statement on Enforcement).
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    2. As discussed in more detail below, pursuant to this Policy 
Statement, we replace the Commission's existing process whereby Office 
of Enforcement (Enforcement) staff must seek settlement authority from 
the Commission prior to engaging in settlement negotiations with the 
subject of an investigation, with a process where the Director of 
Enforcement has the discretion to authorize Enforcement staff to engage 
in such negotiations. Under this new process, formal settlement 
authority, with settlement terms pre-reviewed by the Commission, will 
not be a necessary precondition to the initiation of settlement 
negotiations. Instead, with the Director of Enforcement's 
authorization, Enforcement staff will engage in negotiations with the 
subject of an investigation and, if and when Enforcement staff receives 
a viable settlement offer from the subject, it will negotiate the 
applicable terms and thereafter present the written Offer of Settlement 
to the Commission for formal voting. Importantly, while the new process 
grants Enforcement staff new discretion to commence and engage in 
settlement negotiations, it does not

[[Page 13976]]

change the fact that it is the Commission that ultimately determines 
whether a settlement of an investigation is in the public interest and 
should be approved.
    3. Given the significant role settlements play in the Commission's 
enforcement program, it is important to ensure that the policies and 
practices governing the settlement process are efficient and effective. 
Ensuring that the Commission moves expeditiously benefits the subjects 
of Commission investigations who want to resolve investigations early, 
as well as any market participants, customers, and the public who may 
have been harmed by the alleged violations and to whom disgorgement and 
restitution may be directed once settlement is achieved. The reforms 
adopted herein to the Commission's settlement process enhance both 
Enforcement staff's and investigative subjects' ability to negotiate 
settlements and reduce the time it takes to reach resolution by 
settlement. As a result, the Commission's settlement practices will 
better align with those of similarly situated Federal agencies which do 
not require that Enforcement staff request settlement authority prior 
to engaging in settlement negotiations with subjects of investigations.

I. Introduction and Background

A. Role of Settlements in Part 1b Investigations

    4. Settlement is the preferred means for the Commission to resolve 
investigations that would otherwise result in a recommendation of 
remedial action.\3\ Settlements allow the Commission to devote its 
limited resources to investigating other cases, rather than expending 
significant resources in protracted litigation, which supports our 
mission of ensuring the jurisdictional markets remain free from fraud, 
manipulation, and anti-competitive conduct.\4\ The Commission has 
explained that ``the public interest is often better served through 
settlements because we are able to ensure that compliance problems are 
remedied faster and that disgorged profits may be returned to customers 
faster.'' \5\ In addition, while the Commission does not make findings 
as to whether a violation occurred in an order approving or rejecting a 
settlement offer,\6\ early and transparent publication of settlements 
permits the Commission to expeditiously alert other market participants 
to potential compliance pitfalls and helps avoid repetition of unlawful 
conduct.
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    \3\ Id. P 33.
    \4\ Id.
    \5\ Id.
    \6\ Rather, the Commission determines only whether the 
settlement is a fair and equitable resolution of the matters 
concerned and is in the public interest. See, e.g., Todd 
Meinershagen, 181 FERC ] 61,251, at PP 14-20 (2022); ISO-New 
England, Inc., 180 FERC ] 61,223, at PP 88-95 (2022); Enerwise Glob. 
Tech., LLC d/b/a CPower, 180 FERC ] 61,126, at PP 17-18 (2022).
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B. Revised Policy Statement on Enforcement

    5. In 2008, the Commission issued its Revised Policy Statement on 
Enforcement to ``provide guidance to the regulated community as to 
[its] enforcement policies concerning our governing statutes, 
regulations, and orders.'' \7\ The Revised Policy Statement on 
Enforcement was designed to ``give the industry a fuller picture of how 
our investigative process works, including the considerations 
Enforcement staff takes into account in determining whether to open an 
investigation and, once opened, whether to close it without further 
action or to recommend sanctions.'' \8\ Consistent with this purpose, 
the Revised Policy Statement on Enforcement detailed the procedures the 
Commission, and in particular Enforcement staff, follow when 
initiating, conducting, and resolving an investigation.\9\
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    \7\ Revised Policy Statement on Enforcement at P 1. The Revised 
Policy Statement on Enforcement followed an earlier policy statement 
on Enforcement issued in 2005, following enactment of the Energy 
Policy Act of 2005, Public Law 109-58, 119 Stat. 594 (2005) (EPAct 
2005). See Enf't of Statutes, Ords., Rules, and Reguls, 113 FERC ] 
61,068 (2005) (Policy Statement on Enforcement).
    \8\ Revised Policy Statement on Enforcement at P 5.
    \9\ Id. PP 20-71.
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    6. The Revised Policy Statement on Enforcement explained that, 
before recommending the Commission commence an enforcement proceeding, 
Enforcement staff will attempt to reach a settlement with the subject 
of an investigation. The Commission noted that this is valuable to the 
subjects of investigations, who benefit from potentially lower 
negotiated penalties \10\ and avoiding the costs and risks of 
litigation.\11\ Further, the Commission explained that resolution of 
investigations by settlement benefits the public interest, by ensuring 
the quick remediation of compliance problems and return to customers of 
any ill-gotten gains.\12\
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    \10\ In adopting and subsequently revising its Penalty 
Guidelines, the Commission formalized this financial benefit for 
settling parties, by providing a specific and transparent credit to 
subjects in the penalty calculation for resolving a matter without 
the need for a trial-type hearing. The Commission also separately 
provides credit for cooperating with Enforcement staff and for 
accepting responsibility. See FERC Penalty Guidelines Section 
1C2.3(c) (detailing possible reductions to the culpability score, 
which is used to calculate the civil penalty guideline ranges for 
any particular violation of an organization).
    \11\ Revised Policy Statement on Enforcement at P 33.
    \12\ Id.
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    7. With regard to process, the Revised Policy Statement on 
Enforcement set forth a means by which Enforcement staff would request 
settlement authority from the Commission, prior to engaging in 
settlement negotiations.\13\ It explained that Enforcement staff would 
seek ``authority to negotiate within a range of potential civil 
penalties and/or disgorgement'' and that this process would ensure that 
``the Commission, not staff, determines the appropriate range of 
remedies for purposes of settlement.'' \14\ If Enforcement staff and 
the subject of an investigation reach a settlement in principle, the 
Revised Policy Statement on Enforcement provides that staff will submit 
an executed Stipulation and Consent Agreement to the Commission for its 
consideration.\15\
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    \13\ Id. P 34.
    \14\ Id. (requiring Enforcement staff to provide the Commission 
with the subject's written response to staff's views, if submitted, 
so that the Commission has both the views of its staff and the 
subject before it determines whether to authorize settlement 
negotiations).
    \15\ Id.
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C. Current Policies and Practices Regarding Settlement of Part 1b 
Investigations

    8. Since issuance of the Revised Policy Statement on Enforcement in 
2008, Enforcement staff has followed the process detailed therein 
whereby it seeks settlement authority from the Commission prior to 
entering into settlement negotiations with the subject of an 
investigation. Pursuant to this process, after commencing an 
investigation under part 1b of the Commission's regulations and 
engaging in initial discovery, but before any formal settlement 
negotiations take place, Enforcement staff presents to the Commission 
its views, as developed to that date by the investigation,\16\ and a 
recommended range of potential civil penalties \17\ and/or 
disgorgement. The

[[Page 13977]]

subject's response to Enforcement staff's preliminary findings, if 
available, is also provided to the Commission.\18\ The Commissioners 
then determine whether to approve, modify, or deny the settlement 
authority, or provide alternative direction on how to proceed with the 
investigation.
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    \16\ If at any time Enforcement staff determines that no 
violation has occurred, the evidence is insufficient to warrant 
further investigation, or no further action is otherwise called for 
based on a totality of the circumstances, it closes the 
investigation. Id. P 31. Enforcement staff's annual Reports on 
Enforcement detail examples of cases that Enforcement staff closes 
without taking action. See e.g., 2023 Report on Enforcement, Docket 
No. AD07-13-017, at 19 (Nov. 16, 2023).
    \17\ The civil penalty range for organizations is informed by 
the Commission's Penalty Guidelines. Penalties for individuals are 
determined on a case-by-case basis. See FERC Penalty Guidelines 
Section 1A1.1, Application Note 1.
    \18\ See Revised Policy Statement on Enforcement at P 32 
(describing the process by which Enforcement staff shares its 
preliminary findings with investigative subjects and provides them 
the opportunity to respond).
---------------------------------------------------------------------------

    9. Settlement authority is not pre-approval of any settlement 
ultimately reached between Enforcement staff and an investigative 
subject consistent with the authority granted. Any settlement reached 
after obtaining settlement authority must still subsequently be 
approved by the Commission to be effective, based on a finding that the 
settlement is in the public interest. Thus, while Enforcement staff can 
recommend a settlement to the Commission, it cannot guarantee that the 
Commission will approve a recommended settlement, including the 
specific terms and conditions of the final stipulation and agreement. 
After Enforcement staff reaches a proposed settlement with a subject, 
it submits a Stipulation and Consent Agreement--executed by both the 
subject and the Director of Enforcement--to the Commission for formal 
voting. The Stipulation and Consent Agreement, as well as the related 
order approving the settlement, are generally released publicly upon 
approval.\19\
---------------------------------------------------------------------------

    \19\ Id. P 34.
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II. Discussion

A. Need for Reform

    10. The Commission's existing process for settling cases, which 
requires staff to seek settlement authority from the Commission in all 
cases prior to engaging in settlement negotiations, would benefit from 
certain improvements in light of both Enforcement staff's increased and 
broad experience investigating violations and recommending appropriate 
sanctions for such violations, and inefficiencies that the current 
authorization process can present in many cases for the Commission, 
Enforcement and other Commission staff, and investigative subjects.
    11. The existing settlement authority process was adopted in the 
2008 Revised Policy Statement on Enforcement, as part of the 
Commission's efforts to provide guidance to the regulated community as 
to our enforcement policies in light of the enhanced enforcement tools 
created by EPAct 2005.\20\ At the time of issuance of the 2008 Revised 
Policy Statement on Enforcement, the Commission had little experience 
implementing its new enforcement authorities \21\ and had not yet 
adopted the Penalty Guidelines.\22\
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    \20\ See generally Revised Policy Statement on Enforcement.
    \21\ Revised Policy Statement on Enforcement at PP 10-11 (noting 
that from the time of EPAct 2005 going into effect through the 
issuance of the 2008 Revised Policy Statement on Enforcement, the 
Commission had only resolved 14 investigations by settlement and had 
only issued two Orders to Show Cause, which at that time remained 
pending proceedings).
    \22\ See Enf't of Statutes, Ords., Rules, and Reguls., 132 FERC 
] 61,216 (2010) (Revised Policy Statement on Penalty Guidelines) 
(adopting the FERC Penalty Guidelines, which are modeled on the 
United States Sentencing Guidelines).
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    12. Over the past 15 years, the Commission has gained significant 
experience implementing its enhanced enforcement authorities. Since 
2007, Enforcement staff has negotiated over 150 settlements, pursuant 
to which investigative subjects have agreed to pay almost a billion 
dollars in civil penalties and over a half a billion dollars in 
disgorgement.\23\ The breadth and diversity of matters investigated and 
settled has allowed Enforcement staff to gain broad experience, which 
informs settlement negotiations by allowing Enforcement staff to 
compare factual circumstances to prior matters when considering 
appropriate remedies in those negotiations.\24\ Similarly, in recent 
years the Federal courts have issued opinions interpreting the 
Commission's enforcement authorities. These Federal court cases shed 
light on legal principles, which in turn can help guide and inform 
settlement negotiations by giving insight into the strength of 
Enforcement staff's legal claims, for example.
---------------------------------------------------------------------------

    \23\ See 2023 Report on Enforcement at 19. During this time, 
Enforcement has also initiated and subsequently closed without 
further action hundreds of investigations.
    \24\ See id. at 20-22 (describing the types of violations 
Enforcement staff has resolved by settlement, including violations 
of: the Federal Power Act, Natural Gas Act, and Interstate Commerce 
Act; RTO/ISO tariff provisions; the Reliability Standards; the Anti-
Manipulation Rule and the Commission's market behavior rules; 
Commission orders; amongst others).
---------------------------------------------------------------------------

    13. Further, in 2010, after adoption of the existing settlement 
authority process, the Commission adopted its Penalty Guidelines to 
``add greater fairness, consistency, and transparency to our 
enforcement program.'' \25\ The Penalty Guidelines assign specific and 
transparent weight to each factor taken into consideration in 
calculating a proposed penalty, allowing organizations to know with 
more certainty and in advance how each factor will be applied in any 
particular case, thereby allowing an organization to evaluate how much 
risk it could face in light of an investigation of potential 
violations.\26\ Since their adoption, Enforcement staff has used the 
Penalty Guidelines to analyze and calculate an appropriate penalty 
range for any alleged violations of organizations being investigated, 
thus ensuring consistency and transparency across investigations. Given 
this experience, Enforcement staff need not obtain express sign-off 
from the Commission on a particular settlement range prior to engaging 
in settlement negotiations.\27\ Similarly, Enforcement staff has also 
gained experience recommending civil penalties for individuals and 
settling such matters \28\ and the Commission has precedent assessing 
civil penalties against individuals.\29\
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    \25\ Revised Policy Statement on Penalty Guidelines at P 2.
    \26\ Id. PP 2, 5 (``[T]he Penalty Guidelines . . . provide more 
clarity and consistency by assessing civil penalties based on 
objective characteristics and a uniform set of factors weighted 
similarly for similar violations and similar violators. . . . [T]he 
Penalty Guidelines . . . provide transparency by describing the 
factors we consider in our penalty determinations and the weight 
afforded to each factor.'').
    \27\ The Commission retains the discretion to depart from the 
Penalty Guidelines, based on an individualized assessment of the 
facts presented in any case, when appropriate. Id. PP 2, 5, 19. 
However, it is worth noting that departures from the Penalty 
Guidelines are uncommon. In the context of settlement negotiations, 
Enforcement staff will inform the subject of the investigation of 
any departures from the Penalty Guidelines it will recommend to the 
Commission. Id. P 32 n.51.
    \28\ See, e.g., Todd Meinershagen, 181 FERC ] 61,251.
    \29\ See, e.g., Vitol Inc., 169 FERC ] 61,070 (2019) (assessing 
civil penalty of $1,000,000 against Federico Corteggiano, a trader 
for Vitol Inc.); Houlian Chen, 151 FERC ] 61,179 (2015) (assessing 
civil penalty of $1,000,000 against Houlian Chen, a trader for 
Powhatan Energy Fund, LLC, HEEP Fund, LLC, and CU Fund, Inc.); 
Coaltrain Energy, L.P., 155 FERC ] 61,204 (2016) (assessing civil 
penalties of $5,000,000 each against Peter Jones and Shawn Sheehan, 
co-owners of Coaltrain Energy, L.P., and $1,000,000 against Robert 
Jones, $500,000 against Jeff Miller, and $500,000 against Jack 
Wells, traders for Coaltrain Energy, L.P.). Each of the 
aforementioned cases against individuals subsequently settled. See 
Vitol Inc., 186 FERC ] 61,008 (2024); Coaltrain Energy, L.P., 181 
FERC ] 61,031 (2022); Houlian Chen, 177 FERC ] 61,076 (2021).
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    14. We note also that one of the only stated justifications for 
adopting the existing settlement authority process in the 2008 Revised 
Policy Statement on Enforcement was that it would ``ensure[ ] that the 
Commission, not staff, determines the appropriate range of remedies for 
purposes of settlement.'' \30\ Under the revised

[[Page 13978]]

settlement process the Commission will continue to determine the 
appropriate remedy for purposes of settlement. The Commission must 
approve any settlement Enforcement staff negotiates and find that the 
settlement and its terms are in the public interest. Giving Enforcement 
staff the discretion to initiate settlement negotiations does not 
affect the Commission's ability to ultimately consider, discuss, and 
approve or reject the proposed resolution of any matter.
---------------------------------------------------------------------------

    \30\ Revised Policy Statement on Enforcement at P 34. Notably, 
this statement predates the Commission's adoption of Penalty 
Guidelines for organizations, the existence of which now provides 
staff significant guidance in their determination of appropriate 
penalties in a given matter.
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    15. Further, in addition to developments over the past 15 years, 
the Commission has also found that, in its experience, requiring pre-
authorization to engage in settlement negotiations in all cases--
regardless of the seriousness of the alleged violation or the 
complexity of the case--creates unnecessary burdens on Commission staff 
and investigative subjects who are seeking prompt resolution of 
investigations.
    16. The existing settlement authority process can result in an 
inefficient allocation of limited agency resources. Under the existing 
process, in all cases Enforcement staff and other Commission program 
offices invest significant time in seeking approval to commence 
negotiations, no matter how likely the prospects of settlement are. 
However, after all the time and effort spent on pre-authorization to 
engage in settlement negotiations, the parties may not agree to the 
terms of a settlement.\31\ In these cases, the Commission resources and 
time spent pre-authorizing settlement authority could have instead been 
expended on other Commission priorities.
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    \31\ Sometimes the subject of an investigation may not want to 
engage in settlement negotiations at all. Even in situations where 
Enforcement staff thinks settlement is unlikely, under the existing 
process it still requests settlement authority from the Commission. 
In such situations, this process ends up being a mere formality.
---------------------------------------------------------------------------

    17. Investigative subjects have also expressed frustration at the 
time it can take to complete the settlement authority process in some 
cases. Enforcement staff has found that increasingly subjects are 
inclined to try to resolve investigations quickly through settlement, 
particularly in cases where there are no factual disputes. Moreover, 
prolonging the settlement process by requiring authorization to 
negotiate can result in added burden and expense on investigative 
subjects. As a result, investigative subjects are often ready to begin 
negotiations and determine whether a settlement is attainable, and the 
existing settlement authority process represents a delay--sometimes of 
several months or more--in getting to this step.
    18. Finally, the prolonged settlement authority process also delays 
public dissemination of information about the alleged misconduct. 
Transparency can help prevent further misconduct by sending a message 
of deterrence. Moreover, expedient resolution of investigations by 
settlement ensures that ill-gotten gains are returned to harmed market 
participants and consumers as quickly as possible.
    19. Both the experience Enforcement staff has gained investigating 
and settling diverse cases over the past 15 years and the adoption of, 
and experience applying, the Penalty Guidelines have created a strong 
framework for Enforcement staff to evaluate whether settlement of an 
investigation, and on what terms, can be recommended to the Commission 
to be found to be in the public interest. Further, we find that the 
existing settlement authority process is inefficient, in that it 
unnecessarily consumes limited agency resources and potentially delays 
resolution of investigations by settlement. These factors weigh heavily 
in favor of streamlining the settlement process to eliminate the 
unnecessary intermediate step of getting settlement authority.

B. Streamlined Settlement Process

    20. In light of our experience and also feedback received from the 
regulated industry and subjects of Commission investigations, we hereby 
revise our existing process for settling investigations initiated 
pursuant to part 1b of the Commission's regulations. Specifically, we 
will no longer require Enforcement staff to obtain settlement authority 
from the Commission prior to initiating and negotiating a potential 
settlement of an investigation. Instead, we hereby grant the Director 
of Enforcement the authority to authorize Enforcement staff to commence 
settlement negotiations and/or respond with counteroffers to settlement 
negotiations initiated by a subject. The Director of Enforcement 
retains the existing discretion to engage with the Commission for 
feedback prior to authorizing staff to engage in such settlement 
negotiations on any particular investigation.
    21. After engaging in settlement negotiations, should an 
investigative subject submit a viable Offer of Settlement,\32\ 
Enforcement staff will submit the Offer of Settlement to the Commission 
for voting, along with any other information that might aid the 
Commission's determination as to whether to accept the Offer of 
Settlement, including for example, details about the specifics of the 
alleged violation(s), facts developed by the investigation to date, 
and/or the relevant law. Enforcement staff will also submit the 
subject's response to any preliminary findings issued by Enforcement 
staff, when available. The Offer of Settlement will be executed by the 
subject of the investigation and will remain non-public unless and 
until it is approved by the Commission.\33\
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    \32\ By ``viable'' we mean a settlement offer that Enforcement 
staff, in its considered discretion, believes is sufficient to 
recommend to the Commission for approval based on Commission 
precedent, the facts of the case, and review of the Penalty 
Guidelines.
    \33\ This replaces the existing process whereby Enforcement 
staff typically submits for voting a Stipulation and Consent 
Agreement executed by both the subject of the investigation and the 
Director of Enforcement.
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    22. The major benefit of this approach to settlement negotiations 
is that it will greatly improve the efficiency of the settlement 
process, thereby allowing Enforcement staff to devote time that would 
otherwise be spent seeking settlement authority to other Commission 
investigations or proceedings. Further, unlike the existing settlement 
authority process, this new process ensures that Commission staff and 
the Commissioners are only investing time analyzing settlement terms 
that are known to be acceptable to the subject of the investigation, as 
they have been presented in an Offer of Settlement. We expect that 
these efficiency gains will lead to speedier resolutions of 
investigations, which will better serve the subjects of investigations, 
as well as the public who will see the benefits of required remediation 
faster. We also note that the approach to settlement negotiations set 
forth in this policy statement aligns with other similarly situated 
Federal agency enforcement programs, including the Securities and 
Exchange Commission and the Commodity Futures Trading Commission.
    23. Further, as previously stated, this new process does not change 
the fact that it is the Commission, not staff, that ultimately 
determines whether or not any settlement of an investigation is in the 
public interest. Consistent with our existing process, an Offer of 
Settlement, as well as the related order approving the settlement, will 
generally be released publicly upon approval.

[[Page 13979]]

C. Other Considerations and Clarifications

    24. The settlement authority process and enhancements detailed in 
this policy statement apply only to the process by which the Commission 
resolves investigations conducted by Enforcement staff pursuant to 18 
CFR part 1b, including investigations that relate to violations of the 
mandatory Reliability Standards. The reforms discussed herein do not 
change the process by which parties to a docketed proceeding pending 
before the Commission or set for hearing submit settlements to the 
Commission for consideration,\34\ nor do they affect the process by 
which the Commission reviews proposed penalties (including those agreed 
to by settlement) imposed by NERC and/or the Regional Entities for 
violations of the Reliability Standards.\35\
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    \34\ See 18 CFR 385.602 (2023). For example, the reforms we 
announce today will not affect the settlement process during an 
Order to Show Cause proceeding stemming from a Part 1b 
investigation.
    \35\ See generally, N. Am. Elec. Reliability Corp., 116 FERC ] 
61,062 (2006).
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III. Conclusion

    25. As a Commission, we are always striving to responsibly 
implement our enforcement authorities, and to that end, to continually 
improve and enhance our enforcement policies and procedures to better 
serve the public. Consistent with that goal, we issue this policy 
statement and hereby streamline our settlement process by eliminating 
the requirement that Enforcement staff seek settlement authority from 
the Commission prior to initiating settlement negotiations, and instead 
grant new discretion to the Director of Enforcement to authorize the 
commencement of settlement negotiations. We believe these reforms will 
result in more effective and efficient resolutions of part 1b 
investigations by settlement.

IV. Document Availability

    26. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested parties an 
opportunity to view and/or print the contents of this document via the 
internet through the Commission's homepage (https://www.ferc.gov).
    27. From the Commission's homepage on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    28. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

V. Effective Date

    29. This policy statement is effective February 26, 2024.

    By the Commission.

    Issued: February 15, 2024.
Debbie-Anne A. Reese,
Acting Secretary.
[FR Doc. 2024-03609 Filed 2-23-24; 8:45 am]
BILLING CODE 6717-01-P

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