On July 30, 2015, two weeks after the Office of Enforcement (OE) of the Federal Energy Regulatory Commission (FERC) issued a staff notice of alleged violations (“Notice”) to Columbia Gas Transmission LLC (“Columbia Gas”) for “failing to post . . . notices of the auctions of its available firm capacity on the public side of its Electronic Bulletin Board (EBB) . . . between January 1, 2010 and May 1, 2013,” FERC approved a settlement between OE and Columbia Gas that resolves “all issues relating to the transparency of Columbia Gas’ auctions of its available firm capacity.”  Under the settlement, Columbia Gas admits that the conduct at issue violated its FERC Gas Tariff and agrees to pay a $350,000 civil penalty. FERC did not require additional compliance measures, because Columbia Gas has already implemented improved compliance procedures, including “written procedures and internal controls to ensure Columbia Gas reports accurate and consistent data in its posted capacity reports.”

As we previously noted, and as described in FERC’s order, “[b]eginning in 1993, Columbia Gas offered available firm capacity through auctions in which the notices were posted on the public side of its EBB,” then known as Navigator, as required by its tariff. Later, in 2008, “Columbia Gas replaced Navigator with a new software program (Navigates) that required a login ID to access its password-protected side.”  Then, in 2009, “the notices of the auctions were removed from the public side of Navigates and placed on its password-protected side.”

In September 2014, FERC’s Division of Audits and Accounting (“Audits”) referred the matter to OE, noting that it “believed that it was onerous and confusing for many shippers and potential shippers to locate Columbia Gas’ capacity auctions on Navigates.”  Audits also believed that “there was little transparency and notice of when the auctions were to occur, because the notices were posted on only the password-protected side of Navigates, and some auctions were held on different days, and at different times, without notice of those changes to the schedule. OE ultimately determined that the pipeline’s failure to post those notices “posed a serious threat to transparency in the market, and may have compromised [FERC’s] open-access transportation requirements.”

The civil penalty agreed to by Columbia Gas in this case illustrates the seriousness of FERC’s approach to compliance, not only with the Federal Power Act, Natural Gas Act, and FERC’s regulations and orders, but also with regulated entities’ tariffs approved under those statutes and regulations. Although all shippers had access to the notices, anyone else could obtain access to them by request, and no bidders affiliated with the pipeline participated in the auctions during the investigation period that included capacity awarded at a discount, OE still found the harm to transparency severe enough to warrant a $350,000 penalty.