David Applebaum Quoted in Inside FERC on Possible Changes to FERC’s Enforcement Process

Akin Gump energy regulation, markets and enforcement practice co-head David Applebaum has been quoted in the Inside FERC article “Industry lawyers expect, welcome changes to FERC enforcement practices.” With a new Chairman in place, the article reports that changes could be on the way this year at the Federal Energy Regulatory Commission.

Applebaum, a former FERC Division of Investigations Director, said that with “an almost complete remake of the commission, it’s sensible to rethink certain policies, and I think any new commission would be inclined to do that.” In particular, he said he would like to see a rescission of the policy of identifying enforcement investigation targets in notices of alleged violations, often months before companies or individuals are afforded an opportunity to respond on the record through FERC’s issuance of an order to show cause why penalties should not be assessed. He argued that early publication of an enforcement target was harmful to that subject, undermined settlement negotiations and failed to provide the transparency benefits touted when the policy was established.

Applebaum also said the commission should shorten its investigations, particularly those that staff is ultimately inclined to close. “There are too many instances,” he said, “of smaller cases going on for far longer than they should when the agency could take a look at the facts and say ‘we’re not likely to move forward, … let’s resolve this more quickly and close the investigation sooner rather than later.’”

Speaking about FERC’s repeated losses in court on the issue of de novo reviews, Applebaum said this would not impact the investigative process at the agency, though it does raise questions as to whether the commission will continue with its order to show cause process at the end of investigations. FERC could scrap the process and just issue an authorization to enforcement staff to file a complaint, or it could deem the process in which “the commissioners themselves weigh in on the conduct and what constitutes market manipulation or not [as] important from a public policy perspective,” Applebaum said. “I think that’s a big issue that’s worth paying attention to.”