OE’s investigation focused on 21 asset transfers between August 2006 and February 2014 for which ATC failed to obtain prior authorization under Section 203 of the FPA and 42 instances between October 2000 and May 2011 in which ATC failed to timely file FERC-jurisdictional agreements or notices of termination of FERC-jurisdictional agreements under Section 205 of the FPA. Under the Stipulation and Consent Agreement, ATC admits the violations, agrees to a civil penalty of $205,000—after paying approximately $1.4 million in refunds to customers,and agrees to implement measures designed to ensure future compliance with its Section 203 and 205 obligations, including filing semiannual compliance monitoring reports for one year. (The Stipulation and Consent Agreement also describes numerous compliance program improvements that ATC has already implemented.)
In its order, FERC noted that ATC’s violations, while not willful, resulted from its failure to maintain an effective regulatory compliance program and created a lack of transparency in the market. Factors that FERC considered in determining ATC’s penalty included “the significant volume of transactions and agreements that were not timely submitted to the Commission; the multi-year duration of the violations; ATC’s self-reporting of the violations; the absence of direct harm caused by these violations; ATC’s cooperation and admission of its violations; and ATC’s resolution of this investigation without a hearing.” FERC also emphasized “the importance of the obligation to file with the Commission all required rates and charges for jurisdictional services and all contracts and agreements relating to such services subject to FPA section 205 and to obtain authorization for all transactions subject to FPA section 203 . . . .”
ATC’s penalty, while comparatively modest, again underscores the importance of maintaining a robust FERC compliance program capable of identifying and ensuring compliance with applicable Section 203 and 205 requirements, as well as the potential value in FERC’s penalty calculus of self-reporting, cooperation with OE and admission of violations.