In a November 18 annual report on FERC enforcement actions, the agency’s Enforcement Staff disclosed the outcomes of those actions, including those that the agency took in response to 93 self-reports of violations. The clear message from this annual recap is that prompt self-reporting pays big dividends.
Fiscal year 2010 showed a 24 percent decrease in the number of self-reports compared to the preceding fiscal year, but of those self-reports a majority, 58 percent, were closed with no penalty assessed. The remaining self-reports were still pending an initial review. As to why so many self-reports are closed without penalty, Enforcement Staff explained that in most cases the offender took effective remedial action and promptly submitted a self-report. Further, the Commission chose to impose no penalty in cases where the violation harmed neither the market or other parties or where the violation was inadvertent. Other reasons for declining penalties included:
- the offender discovered the violation through a self-audit program;
- the offender had in place an effective compliance training program;
- the offender did not profit from the violation;
- the violation was isolated and unlikely to recur; and
- the self-report was thorough and complete.
As it has consistently emphasized, FERC looks favorably on self-reporting, and accords self-reporters operating under an effective compliance program a significant credit under the agency’s Penalty Guidelines analysis. The lessons from the 2010 annual review continue to highlight how prompt corrective actions coupled with a timely self-report can help an offender move past a violation, avert or minimize penalties, and prevent future non-compliance.