FR 2021-00679

The document outlines a final rule issued by the Federal Energy Regulatory Commission (FERC), part of the Department of Energy, concerning the adjustment of civil monetary penalties. This adjustment is necessary due to inflation, according to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. By implementing this rule, FERC ensures that penalties imposed for violations of laws under its jurisdiction maintain their deterrent effect even as inflation changes the value of money.

General Summary

The rule describes how civil monetary penalties are recalibrated to align with inflation. This involves using the Consumer Price Index for all-urban consumers (CPI-U) to calculate the percentage increase from one year to the next. The specified adjustments mean that penalties will rise to ensure they remain effective and punitive. The document outlines that this regulation becomes effective immediately upon being published in the Federal Register, bypassing the usual 30-day waiting period.

Significant Issues and Concerns

One primary concern is the lack of detailed explanation on how the adjustments are specifically calculated. The document briefly states the use of the CPI-U but provides minimal detail on how the figures are applied, leaving ambiguity around the exact adjustment methodology. Moreover, the rounding process of these adjustments is mentioned without an in-depth explanation, potentially causing discrepancies or confusion regarding the adjusted penalty amounts.

Another issue is the absence of a public notice-and-comment period, which is normally a vital part of regulatory rulemaking. While the document acknowledges this deviation due to legal dictation, it potentially sidelines public involvement in a process that could affect them.

Impact on the Public

For the general public, the impact of these adjustments may not be immediately apparent unless they are involved with entities under FERC's jurisdiction, such as companies dealing with energy and natural gas. Nevertheless, maintaining penalty efficacy is crucial to instill corporate responsibility, indirectly benefiting consumers by ensuring fair practices in energy markets.

Impact on Stakeholders

Specific stakeholders, particularly entities within the energy sector, are directly affected by these increased penalties. Companies may face higher financial repercussions for violations, which can signify greater accountability but also potentially higher costs of compliance. This could elicit a stronger focus on adherence to regulations, possibly driving changes in how businesses handle regulatory compliance.

In contrast, for small businesses, concerns arise about the potential burden of increased penalties, as even minor infractions could prove significantly costly. However, the document asserts the rule does not significantly impact a substantial number of small entities, aligning with the Regulatory Flexibility Act. Overall, while designed to preserve the penalty's intended impact amidst inflation, there is room for clearer communication and transparency regarding the processes involved.

The Federal Energy Regulatory Commission (FERC) document addresses adjustments to civil monetary penalties due to inflation, in compliance with the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. These adjustments aim to maintain the deterrent effect of penalties by accounting for inflation over time.

Summary of Financial References

In this regulation, FERC stipulates revised maximum civil monetary penalties across various statutes within its jurisdiction. The adjusted penalties are calculated using the U.S. Department of Labor's Consumer Price Index for all-urban consumers (CPI-U) to reflect inflation. The document specifies that the CPI-U for October 2020 exceeded the previous year's by 1.182%. This inflation adjustment, when applied, results in revised penalty amounts.

Key financial figures mentioned include:

• A civil penalty under the Natural Gas Policy Act of 1978, which may not exceed $1,307,164 for any violation.
• Under the Federal Power Act and Natural Gas Act, penalties can reach up to $23,607 per day for continuing violations.
• The Interstate Commerce Act stipulates various penalties, such as $1,368 per offense and $69 per day after the first day.

Relation to Identified Issues

A core issue relates to the transparency and comprehensibility of the penalty calculation process. Although the document explains that penalties are adjusted based on the CPI-U, it lacks specific detail on the rounding process and its implications. The rounding mechanism's influence on the final penalty amount is not thoroughly explained. How minor rounding could affect the substantial sums described here—potentially impacting compliance costs for businesses—might be unclear to stakeholders.

Additionally, the process excludes public notice and comment, which might be disconcerting for those advocating for public participation and oversight in regulatory adjustments. While legal obligations may necessitate bypassing these procedures, the lack of public involvement in determining significant financial penalties can be concerning, especially when adjustments have financial impacts on individuals and organizations.

In summary, while the document provides explicit updated financial penalties, it may not sufficiently clarify the process used to arrive at these figures, nor justify the expedited enactment of these adjustments without the usual public commentary period.