25 June 2018

Energy Enforcement Update

This week’s enforcement update covers:

  • FERC issues Order to Show Cause to Footprint for alleged tariff violations and submission of false information;
  • The Supreme Court denies TOTAL petition for writ of certiorari;
  • FERC settles with Duke Energy regarding alleged violation of FERC market behavior rule on communications;
  • CFTC orders Société Générale S.A. to pay $475 million penalty to resolve charges of alleged LIBOR and Euribor manipulation; and
  • U.S. Department of Justice announces new policy on coordination of corporate penalties.

FERC issues Order to Show Cause to Footprint for alleged tariff violations and submission of false information.  On June 18, FERC issued an Order to Show Cause and Notice of Proposed Penalty directing Footprint Power LLC and Footprint Power Salem Harbor Operations LLC (collectively, Footprint) to show cause why they should not be found to have violated the ISO-NE Tariff, Market Rule 1, §§ III.1.7.20(b) and (f), III.1.10.1A(d), and III.13.6.1.1.2 by submitting what the FERC Office of Enforcement has concluded were false and misleading supply offers for Footprint’s capacity resource—Unit 4 of Footprint’s multi-unit Salem Harbor Power Plant in Salem, Massachusetts (Salem Harbor)—and by failing to report the fuel and related operational status of the capacity resource to ISO-NE in June and July of 2013.  In addition, FERC directed Footprint to show cause why it should not be found to have violated FERC’s market behavior rules (18 C.F.R. §§ 35.41(a) and (b)) by submitting what Enforcement has concluded were false and misleading supply offers in violation of a FERC-approved Tariff, and by submitting false or misleading information and/or omitting material information regarding the Salem Harbor plant and Unit 4 in its communications with ISO-NE.  FERC directed Footprint to show cause why it should not disgorge $2,049,571 in Capacity Supply Obligation payments for the portion of June and July of 2013 when Footprint was paid for capacity that Enforcement found Unit 4 could not provide, and to show cause why it should not be assessed a civil penalty of $4,200,000.

The Supreme Court denies TOTAL petition for writ of certiorari.  On June 18, the U.S. Supreme Court issued a notice that it denied TOTAL Gas & Power North America’s (TOTAL) petition for a writ of certiorari.  As we previously reported, TOTAL had sought review of the judgment of the U.S. Court of Appeals for the Fifth Circuit dismissing TOTAL’s declaratory judgment action against FERC.

FERC settles with Duke Energy regarding alleged violation of FERC market behavior rule on communications.  On June 8, FERC issued an order approving a settlement between FERC’s Office of Enforcement, Duke Energy Corporation and Duke Energy Corporation’s public utility operating subsidiaries.  The settlement resolves Enforcement’s investigation into whether the Duke Respondents failed to fully and accurately communicate information to FERC relating to certain transmission studies submitted in support of their application for the merger of Duke and Progress Energy, Inc. in violation of FERC’s market behavior regulation on communications, 18 C.F.R. § 35.41(b).  Under the terms of the settlement, Duke neither admitted nor denied the alleged violations.  Duke agreed to pay a civil penalty of $3.5 million and to submit compliance monitoring reports for two years.

CFTC orders Société Générale S.A. to pay $475 million penalty to resolve charges of alleged LIBOR and Euribor manipulation.  On June 4, the CFTC issued an order filing and settling charges against Société Générale S.A. for attempted manipulation and false reporting in connection with the London Interbank Offered Rate (LIBOR) for U.S. Dollar, Yen and Euro, and the Euro Interbank Offered Rate (Euribor), certain instances of manipulation of Yen LIBOR, and aiding and abetting traders at another bank in their attempts to manipulate Euribor.  The alleged misconduct spans from 2006 through mid-2012.  The CFTC’s order requires Société Générale to pay a civil monetary penalty of $475 million and adhere to specific undertakings to ensure the integrity of its LIBOR, Euribor, and other benchmark interest rate submissions in the future.  In addition, the CFTC issued a document providing examples of alleged misconduct from written and oral communications by Société Générale S.A.

U.S. Department of Justice announces new policy on coordination of corporate penalties.  As described by our colleagues in this Sidley FCPA/Anti-Corruption Update, on May 9, Deputy Attorney General Rod Rosenstein announced a new policy that could have important  consequences for corporate enforcement actions where penalties are imposed by more than one regulator or law enforcement authority.  The new policy encourages coordination of corporate resolution penalties in these cases, with a goal of reducing duplicative fines and penalties.

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