As the novel coronavirus (COVID-19) continues to spread, Sidley is helping clients navigate the potential consequences to energy markets and attendant legal risks. The following frequently asked questions address actions by the U.S. Federal Energy Regulatory Commission (FERC) on April 2, 2020 in response to the current market conditions. This document updates energy regulatory FAQs published by Sidley on March 20, 2020.
1. Has FERC taken any additional actions to help regulated entities manage their potential enforcement and compliance-related burdens during the COVID-19 pandemic?
On April 2, 2020, Chairman Neil Chatterjee issued a news release detailing the proactive steps FERC is taking to help regulated entities manage their potential enforcement and compliance-related burdens during the COVID-19 pandemic. “Regulated entities are taking extraordinary steps to ensure continuity for our energy systems during this unprecedented time. We’re doing all we can to lift regulatory burdens and uncertainty, so that the focus can remain on critical front-line efforts,” Chairman Chatterjee said. Chairman Chatterjee announced that FERC will exercise appropriate prosecutorial discretion in addressing events that arise during the emergency period: “I’ve said this before, but it bears repeating: The Commission will not second-guess the good faith actions that regulated entities take in the face of this emergency.” FERC Enforcement staff will take the current emergency into account when evaluating compliance programs as part of its analyses under the Penalty Guidelines or as part of an audit for operations taking place during the emergency. Enforcement staff also will take the crisis into account in assessing the timeliness of self-reports, including the self-report credit under the Penalty Guidelines. Chairman Chatterjee announced the creation of two FERC staff task forces to expeditiously process standards of conduct waiver requests and no-action letters. The FERC.gov coronavirus, standards of conduct and no-action letter web pages have been updated with staff contact information and enhanced procedures to facilitate prompt resolution of these matters. “While I encourage regulated entities to take advantage of the open lines of informal communication with Enforcement staff, I highlight two additional procedural options for obtaining more formal enforcement or compliance-related guidance — standards of conduct waivers and no-action letters,” Chairman Chatterjee said. Chatterjee also confirmed that the COVID-19 pandemic qualifies as an emergency, triggering the suspension of certain standards of conduct posting requirements in FERC’s regulations. Under those regulations, if an entity faces a disruption for more than one month and cannot resume standards of conduct posting obligations as a result of COVID-19, it should file a waiver request. The other measures announced include these:
- Enforcement staff will be in communication with the subjects of continuing nonpublic investigations and audits, and entities with continuing compliance obligations associated with completed enforcement cases. Staff will work with each entity to provide flexibility with discovery-related or other deadlines through July 31, 2020. Subjects are encouraged to reach out directly to Enforcement staff with any questions about deadlines.
- Enforcement staff will not begin any new audits until July 31, 2020.
- Enforcement staff will contact entities regarding only surveillance inquiries that involve market behavior that could result in significant risk of harm to the market and thus require immediate attention. Inquiries not requiring immediate attention will be postponed to a later date.
- FERC has issued an extension to June 1, 2020, for Form Nos. 552, 60 and 61 as well as Electric Quarterly Reports. FERC will continue to expeditiously process individual waiver or extension requests.
- Entities may delay for 60 days the submission of self-reports that involve inadvertent errors producing no significant harm to the markets, ratepayers or other market participants.
- Chairman Chatterjee also stressed FERC’s continuing efforts to protect markets through surveillance: “The Commission will remain vigilant during this challenging period and will continue its market surveillance efforts to protect market participants and consumers from the effects of anti-competitive behavior.”
FERC Enforcement staff continues to monitor, without interruption, its surveillance data feeds and screening processes while operating in a remote status.
2. What is FERC doing about tariff requirements requiring in-person meetings and document notarization?
On April 2, 2020, FERC issued an order providing a blanket waiver of requirements to hold meetings in-person and/or to provide or obtain notarized documents contained in FERC-regulated tariffs. FERC’s order grants a blanket waiver of all such requirements through September 1, 2020. This waiver applies to the in-person meeting and document notarization requirements in an open access transmission tariff, other tariff, rate schedule, service agreement or contract subject to FERC’s jurisdiction under the Federal Power Act, the Natural Gas Act or the Interstate Commerce Act.
A number of FERC-regulated entities had already requested temporary waivers of requirements to hold certain meetings in-person and the requirements that certain forms provided in the course of business be notarized. For example, on March 27, 2020, the New York Independent System Operator, Inc. (NYISO), submitted in Docket No. ER20-1419 a request for waiver of requirements in its tariff that certain documents provided to NYISO by customers be notarized for the duration of the state of the emergency declared by New York state with respect to COVID-19.
3. Has FERC extended the time period for RTOs/ISOs posting required reports? On April 2, 2020, FERC issued an order extending the time period for regional transmission organizations (RTOs)/independent system operators (ISOs) to post all Uplift Reports and Operator Initiated Commitment Reports. FERC extended to October 20, 2020, the time period for all reports that otherwise would have been required to be posted between April and September 2020. By way of background, in April 2018, FERC issued a final rule requiring each RTO/ISO to post certain information on publicly available portions of their websites at specified times. In particular, RTOs/ISOs must publicly post on their websites (1) within 20 days after the end of each month, a report of uplift paid in dollars and categorized by transmission zone, day and uplift category; and (2) within 90 calendar days of the end of each month, a report of the resource name and the total amount of uplift paid in dollars aggregated across the month to each resource that received uplift payments within the calendar month (Uplift Reports). Each RTO/ISO must also publicly post on its website a report of each operator-initiated commitment listing the size of the commitment, transmission zone, commitment reason and commitment start time within 30 calendar days of the end of each month (Operator Initiated Commitment Reports). 4. What has FERC done with respect to granting extensions or petitions for waiver of the requirements to file FERC Form No. 552 (Annual Report of Natural Gas Transactions) and FERC-730 (Report of Transmission Investment Activity)?
On April 2, 2020, FERC issued a final rule delegating authority to the Director of the Office of Energy Policy and Innovation, or the Director’s designee, to take appropriate action on motions for extension of time to file, or requests or petitions for waiver of the requirements of, FERC Form No. 552 (Annual Report of Natural Gas Transactions) and FERC-730 (Report of Transmission Investment Activity). This rule becomes effective upon publication in the Federal Register. According to FERC, in light of the emergency conditions related to COVID-19, this delegation of authority will allow for more efficient processing of and action on motions for extension of time to file, or requests or petitions for waiver related to FERC Form No. 552 and FERC-730. These delegations apply to uncontested matters. FERC’s Chairman had previously transferred certain functions performed by the Office of Enforcement’s Division of Energy Market Oversight, including the administration of FERC Form No. 552 and FERC-730, to the Office of Energy Policy and Innovation. FERC’s final rule issued on April 2 amends FERC’s regulations to delegate authority to the Director of the Office of Energy Policy and Innovation, or the Director’s designee, to take appropriate action on motions for extension of time to file, or requests or petitions for waiver of the requirements of, FERC Form No. 552 and FERC-730. This authority was previously delegated to the Director of the Office of Enforcement. Given this change, FERC concluded it is reasonable to now delegate this authority to the Director of the Office of Energy Policy and Innovation. 5. Will FERC give priority to filings made to assure the business continuity of regulated entities’ energy infrastructure? Yes. On April 2, 2020, FERC issued a Policy Statement in Docket No. PL20-5 announcing that it will give its “highest priority to processing filings made for the purpose of assuring the business continuity of regulated entities’ energy infrastructure” during the COVID-19 National Emergency. FERC stressed that the reliability and security of the nation’s energy infrastructure is “vital” and that meeting energy requirements is “essential to the American people.” The Policy Statement also emphasized the importance of cooperation among the federal government, industry, customers, and state and local governments to protect business continuity. The Policy Statement may provide regulated entities with the assurances they need to spend the necessary monies to safeguard their business continuity during the COVID-19 National Emergency, such as through the implementation of new procedures to effectuate remote-work capabilities, without being concerned about future cost recovery. The Policy Statement states that FERC wants to “assure regulated entities that we will expeditiously review and act on requests for relief,” with cost recovery being the primary example. Generally, regulated entities may not increase their published rates without seeking prior FERC approval. In the past, FERC has created special policies to allow for cost recovery in an emergency. For example, FERC issued a policy statement shortly after the terrorist attacks of September 11, 2001, to assure regulated entities that it would approve applications to recover prudently incurred costs necessary to safeguard reliability and security. 6. Is there a process in place to expedite uncontested waiver requests resulting from the COVID-19 National Emergency? Yes. On April 2, 2020, FERC issued an order temporarily delegating authority to the Director of the Office of Energy Market Regulation (OEMR), or the Director’s designee, to act on uncontested requests for waiver of certain regulatory obligations that are filed as a result of the COVID-19 National Emergency. The delegated authority expires on June 1, 2020. FERC anticipates that entities will need to seek waivers of various requirements that they cannot comply with due to the extraordinary circumstances created by COVID-19. The delegation to OEMR will allow FERC to better process its review of such requests. The obligations that the OEMR Director may act upon include uncontested requests or petitions filed pursuant to section 4 of the NGA, section 205 of the Federal Power Act, and section 6(3) of the Interstate Commerce Act requesting prospective waivers of requirements stated in FERC orders, regulations, tariffs, rates schedules and service agreements in response to steps the movants have taken related to COVID-19. As examples, FERC cites recent waiver requests filed by PJM Interconnection, L.L.C. (PJM) and NYISO. PJM sought waivers to allow for additional time to meet certain deadlines in its Open Access Transmission Tariff due to delays created by work-at-home measures, while NYISO sought waivers of requirements to notarize certain documents. In a related order granted by FERC on April 2, 2020, FERC granted a blanket waiver of requirements to hold meetings in person and/or to provide or obtain notarized documents contained in FERC-regulated tariffs.
This temporary delegation to the Director of OEMR is in addition to delegated authority already contained in Part 375 of FERC’s regulations, 18 C.F.R. § 375.307.